Oil falls after record rally past $99
NEW YORK (Reuters) - Oil fell on Wednesday after hitting an all-time high above $99 a barrel as a stockpiles rose at a key U.S. storage hub and concerns mounted over the health of the world's top economy.
U.S. crude oil fell 29 cents to $97.74 a barrel by 2:03 p.m. EST after surging to a record $99.29 early in the session. London Brent crude gave up 5 cents at $95.44 a barrel.
Prices dipped after U.S. government data showed a build in crude stocks at the delivery point for U.S. crude futures at Cushing, Oklahoma, encouraging profit-taking ahead of the Thanksgiving holiday.
Overall U.S. crude inventories fell, however, by an unexpected 1.1 million barrels last week, countering analysts calls for a 600,000-barrel build.
"The crude draw is bullish, however the market will be rangebound due to people being out for the holiday," said Dan Flynn, analyst at Alaron Trading.
"The crude build at Cushing is catching up from the surprise draw in the previous week so that is neutral."
Adding pressure, U.S. stock markets fell sharply on fears that fallout from the credit crisis will hurt economic growth and news that U.S. consumer sentiment was at its lowest level in two years in November.
"The Dow is down, leading economic indicators were low, and sentiment as well," Kyle Cooper at IAF Advisors.
Analysts have said wider problems with the U.S. economy could hurt oil demand growth as consumers are squeezed by higher mortgage and fuel costs.
Oil has surged about 45 percent since mid-August, driven by increased speculative investment, tighter supplies and a slide in the dollar, which has spurred buying of relatively cheap greenback-denominated commodities.
The dollar sank to a new record low against the euro and versus a basket of currencies on Wednesday after the U.S. Federal Reserve cut its growth outlook for next year, boosting chances of another interest rate cut in December.
Rising oil costs could force more than three-quarters of Americans to tighten budgets by cutting fuel use or by slashing spending elsewhere, according to a Reuters/Zogby poll.
Some 32.5 percent of people surveyed said they would drive less if oil prices kept rising, while 20.8 percent said they would try to conserve energy at home and 22.8 percent said they would cut spending on retail and entertainment.
Gold and platinum have also rallied in response to the falling dollar, although copper and zinc have slumped to multi-month lows on concerns the U.S. mortgage crisis could slow economic growth and demand.
U.S. Energy Secretary Sam Bodman called on OPEC to pump more oil to bring prices down. But officials from the cartel, which meets on December 5 in Abu Dhabi to chart supply policy, have said the market is well-supplied and it is up to consumer countries to curb speculation through regulation.