Singapore: World oil prices retreated but stayed above $130 in Asian trade on 29 May amid growing jitters about falling U.S. gasoline consumption spooked by skyrocketing pump prices.
New York’s main oil futures contract, light sweet crude for July delivery, fell 77 cents to $130.26 per barrel.
The benchmark contract shot up $2.18 to close at $131.03 on 28 May at the New York Mercantile Exchange.
London’s Brent North Sea crude for July delivery slid 80 cents to $130.13 a barrel, after settling at $130.93 on 29 May. The contract had rallied $2.62 at close.
Tony Nunan, of Mitsubishi Corp’s international petroleum business in Tokyo, said the retreat was due to “regular volatility”, sparked by news of lower gasoline demand in the U.S., the world’s largest oil-consuming nation.
“Oil prices are getting to levels where they are starting to affect demand negatively,” he said.
The price of oil on international markets has surged by about a third since the start of 2008 and compares with $50 per barrel 18 months ago.
A top economic adviser to US President George W. Bush warned that rising oil prices could further crimp economic growth in the U.S.
“I think the high price of oil has already cost us a significant amount in terms of economic growth,” said Edward Lazear, chairman of the Council of Economic Advisers.
Lazear said red-hot oil prices would continue to dent economic growth unless something is done about the runaway values.
Analysts said increased speculative trading in the oil markets has been driven by tight global supplies and a weaker dollar, which makes commodities priced in the US currency cheaper for buyers armed with stronger currencies.
“Surging oil prices have also been underpinned by growing demand in China and other emerging economies, as well as unrest in crude-producing countries, particularly Nigeria, and OPEC’s reluctance to hike output,” analysts said.
The Organisation of the Petroleum Exporting Countries (OPEC), which pumps 40% of the world’s oil, has proven reluctant to bend to U.S-led demands for it to pump more crude to help cool prices.