NEW YORK (Reuters) - Oil slipped from record highs on Thursday as top exporter Saudi Arabia insisted markets were amply supplied despite falling U.S. inventories.
U.S. crude gave up 34 cents to $110.53 a barrel by 1:51 p.m. EDT after trading just one cent shy of the record $112.21 struck on Wednesday. London Brent crude fell 2 cents to trade at $104.45 a barrel, after hitting an all-time high of $109.98 earlier.
“The market rallied on the weak dollar and Nigerian problems overnight, but Saudi talk of a market well supplied may have capped it,” said Tom Bentz, analyst at BNP Paribas Commodities Futures Inc.
Ali al-Naimi, oil minister for top OPEC producer Saudi Arabia, said supplies were adequate and record prices were not due to a lack of oil, adding the Kingdom did not plan to change current output.
“I am not going to pull back. I’m not going to dump crude on the market,” Naimi told reporters at a conference in Paris.
“In my perspective, the oil market is well-supplied. The price is not at that level because of any shortage in supply,” he added.
Oil shot to fresh peaks on Wednesday after government data showed a surprise drop in crude oil and fuel supplies.
Consumer nations have repeatedly asked OPEC producers to increase production to help ease the sting of rising prices.
OPEC ministers will attend an industry gathering in Rome later this month, but are not expected to call a meeting there to review output policy. Members of the cartel argue that speculators are driving up prices, and say an extraordinary meeting before the scheduled September meeting is not needed.
“There is no reason to have a meeting because the stock is building up and the market is well-balanced, but of course things can change,” a Gulf source told Reuters on Thursday.
Oil also has found support from the slumping U.S. dollar, which touched a record low against the euro on Thursday before paring losses when European Central Bank President Jean-Claude Trichet did not drastically change his growth and inflation views for the euro zone.
A weak greenback tends to boost prices for dollar-denominated commodities by increasing non-U.S. spending power and drawing investors seeking an inflation hedge.
Oil also found strength earlier Thursday after traders said shipments of Nigerian Qua Iboe crude would be delayed for a second month.
China also revised up its 2007 GDP growth by 0.5 percent points to 11.9 percent, supporting expectations the giant energy consumer’s oil demand would not be hit by the global credit crisis that has hit U.S. fuel use.
Additional reporting by Robert Gibbons, and Gene Ramos in New York; Maryelle Demongeot in London; Luke Pachymuthu in Singapore; Editing by Marguerita Choy