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NEW YORK: Oil prices slumped on Thursday as investors locked in profits against the backdrop of a strengthening dollar, which discourages buying of the commodity.
New York's main contract, light sweet crude for April delivery fell 73 cents to 82.20 dollars a barrel.
London's Brent North Sea crude for May delivery was down 48 cents to 81.48 dollars.
"Some of it may be due to profit taking, and some of it may be due to the dollar being stronger," said analyst Andy Lipow of Lipow Oil Associates.
"And, also in Europe financing of the Greek debt has come into question. If debt is not refinanced, people interpret that as bad for the economy."
The euro sank against the dollar on Thursday on persistent worries over the Greece debt crisis.
Anxiety over the fate of Greek finances deepened as the European Union groped for common ground on how to ensure that Greece will be able to borrow money on financial markets at rates similar to those paid by its partners.
Clearly dissatisfied with what they see as a tepid EU response thus far, Greek authorities have made it clear they are prepared to go to the International Monetary Fund for help, a potential step that has divided the eurozone.
A stronger greenback makes dollar-denominated crude more expensive for buyers using weaker currencies.
Analysts also said oil futures prices had risen too fast in recent days and did not reflect demand on the ground.
"Prices are running ahead of fundamentals and remain disconnected from the physical market," said Mike Fitzpatrick, vice president of MF Global.
"The longing for real value can be the only rational explanation for rising oil prices," he said, citing depressed consumer sentiment.
"Commodity prices may continue to rise even as deflationary pressures mount. No matter how much liquidity is pushed into the banking system, like Japan is doing now, until consumers go back to work, demand will remain tepid," Fitzpatrick said.
Crude futures had risen on Wednesday on signs of stronger energy demand in the United States and after the OPEC oil cartel decided to freeze its output levels in line with market expectations.
The US Department of Energy said stockpiles of distillates, including diesel and heating fuel, fell more than expected, by 1.5 million barrels, in the week ending March 12. Gasoline sank by 1.7 million barrels, widely topping forecasts.
OPEC left its output ceiling unchanged at 24.84 million barrels a day at a meeting in Vienna, citing uncertainty in the macroeconomic environment and world oil demand.
OPEC said it would review the economic situation at its next ordinary meeting in Vienna on October 14. - AFP/de
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