Oil falls after striking record $90 a barrel
NEW YORK (Reuters) - Oil prices receded on Friday as dealers took profits from a record rally over $90 a barrel that was spurred on by winter supply worries and the weakening U.S. dollar.
U.S. crude settled down 87 cents at $88.60 a barrel, down from the all-time high of $90.07 hit earlier in the day. London Brent crude lost 81 cents $83.79.
U.S. oil has rallied more than 15 percent since October 8 as the dollar slipped to record lows against other currencies, fueling concerns about their effects on the economy of top consumer the United States.
"The dollar weakened further, spurring some investment into oil as a hedge against dollar weakness," said David Moore, commodity strategist from the Commonwealth Bank of Australia.
"And there are still concerns that oil market conditions will remain tight over the northern winter."
Oil has averaged just over $67 a barrel this year and is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.
The weakening dollar and surging energy costs have increased worries over the health of the U.S. economy, already battered by the crisis in the subprime mortgage sector.
The administration of U.S. President George W. Bush has said energy costs pose a problem for low-income families, and on Friday reiterated its concern about current price levels.
"There's no magic to any particular number like $90 a barrel. Obviously we prefer oil prices lower," White House spokesman Tony Fratto told reporters.
The price rise has also worried OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on November 1, but some cartel officials have said there is little it can do to cool down prices.
Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 percent below year-ago levels, while gasoline and distillate stocks are about 7 percent below last year.
Rising tensions between Turkey and Kurdish rebels in northern Iraq has also helped push up crude, as traders worry about a disruption in flows of Iraq's northern oil exports.
(Additional reporting by Alex Lawler in London and Felicia Loo in Singapore)
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