Oil prices eased from recent highs in Asian trade on Monday after international finance ministers warned that near-term global economic prospects had weakened.
In afternoon trade, New York’s main oil contract, light sweet crude for delivery in May, fell by 29 cents to $109,85 per barrel.
The contract closed at $110,14 during floor trading on Friday at the New York Mercantile Exchange. It had rocketed to a record $112,21 during intra-day trade on Wednesday.
London’s Brent North Sea crude for May dropped by 28 cents to $108,47 a barrel, after closing at a record of $108,75 on Friday in London.
”Prices are going down from the given perception that the United States is in recession,” said David Johnson, an oil analyst at Macquarie Research in Hong Kong.
Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore, said prices were also under the influence of movement in the dollar.
The latest economic warning came on Friday from finance ministers and central bank governors of the Group of Seven (G7) major industrialised countries.
The world economy ”continues to face a difficult period … [and] near-term economic prospects have weakened,” the G7 officials said in a statement after their meeting in Washington.
The finance chiefs from Britain, Canada, France, Germany, Italy, Japan and the US were tackling a complex crisis that began in the US subprime, or high-risk, home-loan market in August and has spread into a global credit squeeze draining world growth.
”The turmoil in global financial markets remains challenging and more protracted than we had anticipated,” the G7 said before weekend meetings of the board of governors of the International Monetary Fund and World Bank.
A slowing US, the world’s biggest economy, could hit demand for energy products. The US is the world’s thirstiest oil consumer.
The dollar staged a brief rebound in Asian trade on Monday after the G7 showed growing concern about the currency’s recent slide, dealers said. But the rally soon ran out of steam as traders bet that the rich nations will refrain from joint intervention to buy the ailing greenback for now.
The euro was quoted at $1,5719 in Tokyo afternoon trade, down from $1,5805 in New York on Friday but up from earlier lows in the $1,56 range.
A stronger dollar discourages demand for dollar-priced goods, such as crude oil, as it can make them less affordable for buyers in other currencies.
The International Energy Agency (IEA) on Friday revised its estimate for global demand for oil this year down to 87,2-million barrels per day, a reduction of 310 000 barrels per day from its estimate last month.
But the forecast initially did little to ease speculative fervour from investors who turned to oil in the face of financial market turmoil, dealers said.
The IEA acts as energy policy adviser to major industrialised nations. — Sapa-AFP