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Saturday, July 5, 2008
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Oil remains at $145.80

Oil prices fell yesterday on profit-taking, a day after surging to record highs on the back of a weak dollar and concerns over tight supplies, traders said.

Brent North Sea oil for August delivery slid 80 cents to 145.80 dollars a barrel in electronic deals.

New York's main oil contract, light sweet crude for August delivery, shed one dollar to 144.29 dollars.

On Thursday, Brent soared to a life-time peak of 146.69 dollars a barrel. New York crude leapt to an all-time pinnacle of 145.85 dollars on Thursday.

"I think the uptrend is intact and supply-side concerns will really drive pricing in the coming weeks," said Victor Shum, of Purvin and Gertz international energy consultancy.

Oil has broken a series of price records this week, continuing the momentum begun at the start of the year when it broke through 100 dollars for the first time.

The surge has triggered fears over inflation and slower economic growth, while sparking protests around the world.

Divisions between consumer and producer countries on who to blame appeared to sharpen at the World Petroleum Congress this week, which brought together political and corporate oil bosses in Madrid.

Saudi Arabia, Opec's leading exporter, expressed concern on Thursday about new records for benchmark crude and again said it was committed to dialogue between consumers and producers.

But those discussions show no sign of finding a solution to market tensions. Both sides cite different reasons: consumers underline supply shortage fears, while producers blame financial speculators and a falling dollar.

Oil prices, which have doubled in value over the past year, were partly driven this week by news that American crude stockpiles fell by 2.0 million barrels to stand at 299.8 million barrels in the week to June 27.

The US government's Energy Information Administration had also revealed on Wednesday that crude inventories were 15.3 percent lower than at the same stage one year ago.

The record-breaking price surge also came after Iranian Oil Minister Gholam Hossein Nozari said that Iran would react fiercely to any military attack against the oil exporter.

The Opec oil exporting group added on Thursday that it would be difficult to replace the crude output of Iran should the country face attack.

There has been a surge in speculation recently that Israel might be planning a military strike against Iran's nuclear sites.

Iran has been locked in a five-year standoff with the West over its nuclear programme. Iran claims it is for generating electricity while Western powers fear the development of nuclear weapons.

The oil market also found key support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said.

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