Oil slipped towards $81 a barrel today as investors took profits from near-record highs, but a weak dollar helped stem losses sparked by worries of an economic slowdown in top consumer the United States.
US crude eased 24 cents to $81.25 by 0955 GMT after falling $1.22 on Friday, when profit-taking dragged the market back from an intraday high of $83.76. London Brent crude slipped 26 cents to $78.91.
Oil has surged more than 30 percent this year to an all-time high of $83.90 in late September on expectations of a supply shortfall in the fourth quarter as heating demand peaks.
An Iranian oil official said yesterday the price of U.S. crude could gain $10 from current levels by December if the dollar continued to weaken.
The dollar touched a new low against the euro and a basket of currencies early today, still tumbling after data on Friday supported expectations the Federal Reserve would cut interest rates again to stimulate the economy.
Apart from a weak dollar, analysts said expectations of tightening fuel supplies heading into winter and the threat of supply disruptions due to hurricanes would also support prices in the near term.
But gains are likely to be capped by worries that high energy costs combined with a credit crunch and US housing slowdown will hurt spending and drag heavily on economic growth.