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NEW YORK - Oil prices slumped Thursday as investors locked in profits amid a rise in the dollar and renewed doubts about a sustainable global economic recovery.
New York's main contract, light sweet crude for December delivery, fell 2.12 dollars to 77.46 dollars a barrel, a day after soaring past the sensitive 80 dollar mark.
London's Brent North Sea crude for January lost 1.83 dollars to 77.84 dollars a barrel.
An array of largely unimpressive US economic data caused a fall on Wall Street as investors sought safety in the dollar, a traditional safe haven currency in times of distress.
The rising greenback in turn dampened oil prices. A stronger greenback makes dollar-denominated commodities -- like crude oil and gold -- more expensive for buyers using other currencies. That tends to reduce demand for such raw materials.
"The equity market is really what's driving the market down," said independent oil analyst Ellis Eckland.
"The equity market now is almost like a liquidity indicator more than anything else. When it goes up and down all risky assets tend to go up and down," he said.
The market Thursday was unimpressed by fresh economic data, including the unchanged number of initial claims for US jobless insurance benefits.
Government data showed that the seasonally adjusted number of new unemployment claims in the week ending November 14 remained at 505,000.
"One of the major impediments for energy demand growth will be the persistent unemployment plaguing the developed economies," said Mike Fitzpatrick of MF Global.
"This will be an impediment to any 'exit plan' from stimuli enacted around the world, which in turn will further swell their already groaning deficits, which in themselves impede growth. So it goes," Fitzpatrick said.
On Wednesday, oil prices rose -- with the New York contract breaching 80 dollars per barrel -- after government data showed crude reserves in the United
States -- the world's biggest energy consuming nation -- fell by 900,000 barrels in the week ending November 13.
The decline was more than the 600,000 barrels anticipated by the market.
US gasoline or petrol inventories tumbled 1.7 million barrels, confounding expectations for a small gain.
Stockpiles of distillates, which include diesel and heating fuel, fell 300,000 barrels. Analysts had pencilled in a bigger drop of 500,000 barrels.
Analysts said the drop in inventory levels was exacerbated by Hurricane Ida, which weakened to a tropical storm earlier this month but led to the closure of some petroleum installations in the Gulf of Mexico.
- AFP /ls
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