Profit-taking pulls oil back from record

NEW YORK (Reuters) - Oil prices slipped into negative territory on Wednesday, retreating from an all-time high above $98 a barrel as speculators took profits from the record rally.

U.S. government data showing a slowdown in fuel demand in the world's largest energy consumer encouraged the selling.

"Total product demand continues to take it on the chin with prices at lofty levels, a trend we picked up on in the summer," said Chris Jarvis of Caprock Risk Management.

U.S. crude settled down 33 cents to $96.37 a barrel, after surging to a record $98.62 earlier in the day. London Brent was down 2 cents at $93.24 a barrel.

Oil prices have surged about 40 percent since August as record weakness in the dollar, robust global demand and shrinking inventory levels attracted huge speculative investment.

Some analysts have said oil could climb above $100 a barrel in the coming days amid expectations that stockpiles in major consumer countries will grow tighter this winter.

But on Wednesday dealers said speculators were taking profits from the recent rally and eyeing soft demand figures.

In the past month, demand for fuel in the United States fell 0.4 percent from a year ago, the U.S. Energy Information Administration said in a weekly report.

The EIA added that crude stockpiles slipped by a smaller-than-expected 800,000 barrels last week to 311.9 million barrels, bringing inventories about 8 percent below a year ago.