Oil prices fall as investors cash in on profits

Oil prices fall as investors cash in on profits
Reuters Published: October 02, 2007, 00:12

London: Oil fell below $81 a barrel yesterdayas investors took profits from near-record highs of last week. But a weak dollar helped check losses sparked by worries of an economic slowdown in top consumer the US.

US crude fell 83 cents to $80.83 by 1441 GMT, having sunk more than $1 to $80.59 in earlier trade. London Brent crude dropped $1.10 to $78.07.

Oil has surged more than 30 per cent this year to an all-time high of $83.90 in late September on expectations of a supply shortfall in the fourth quarter as heating demand peaks.

A weaker dollar has also propped up oil and other commodities as they become cheaper for holders of other currencies. Gold hit a 28-year high on Monday, while platinum neared a record peak.

"The weaker dollar, for now, is the most consistent bullish theme that explains the incredible bullish momentum we are seeing in a variety of commodity complexes," said Edward Meir at broker MF Global.

The dollar sank to a new low against the euro and a basket of currencies early yesterday, then rebounded as investors cashed in.

An Iranian oil official said on Sunday the price of US crude could gain $10 from current levels by December if the dollar continued to weaken.

Apart from a weak dollar, analysts said expectations of tightening fuel supplies heading into winter and the threat of supply disruptions due to hurricanes would also support prices in the near term.

The Organisation of the Petroleum Exporting Countries agreed last month to boost production by 500,000 bpd to soothe consumer concerns over high prices and tight supplies.