Oil prices held around $110 a barrel today, as a rebound in the dollar against the euro and Saudi Arabia's comment that markets were well supplied led investors to reduce positions, but firm Chinese demand lent support.
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| A woman fills her tank at a gas station in New York, US earlier this week.
Oil prices hit a record high of $112.21 a barrel on Wednesday |
US light crude for May delivery which has gained 14 per cent so far this year, fell to as low as $109.49 a barrel, steadying at $110.10 by 8.09am, down a cent. London Brent crude gained 25 cents to $108.45 a barrel.
The market hit a record high of $112.21 a barrel on Wednesday, after government data showed a surprise drop in crude oil and fuel supplies.
The price decline came after the dollar surged from record lows against the euro as European Central Bank President Jean-Claude Trichet expressed concerns over high inflation, sluggish growth and foreign exchange volatility.
The recent weakness in the US currency has prompted funds to buy dollar-denominated commodities, pushing up prices of crude oil, gold, metals and grains.
But worries over oil demand in top user the United States undermined prices, as fresh signs of a fast-weakening economy more than offset concerns about falling US inventories.
The US commercial paper sector shrank for a second straight week to $1.817 trillion in the week ended April 9th, down $10.8 billion from a week earlier, as a slipping economy exacerbated the credit market strains buffeting short-term loan markets.