Oil slips towards $101 on profit taking

Oil slips towards $101 on profit taking

Oil prices fell as investors sought to lock in profits and as top exporter Saudi Arabia reassured consumers of its plans to boost supply.

US light crude for May delivery was trading 62 cents lower at $101.22 a barrel by 11.20am, after hitting an intraday low of $100.02

London Brent crude dropped 27 cents to $100.43.

US crude has fallen from a record high of $111.80 struck on March 17 as investors have fled from commodities on fear that gains had been overdone and that economic slowdown in the United States, the world's top consumer, might hit oil demand.

"We suspect that the correction in commodities still has some ways to go, and we could push somewhat lower from here," Edward Meir with MF Global said in a research note.

Even before a $5 plunge in prices on Thursday, speculators cut their long positions for the week to Tuesday last week, the US Commodity Futures Trading Commission said on Friday.

The fall came as many speculators sold energy positions to deleverage portfolios and raise cash to meet margin calls stemming from turmoil in global capital markets.

The market also reacted to comments from Saudi Arabia, which said yesterday it was working to expand its oil production and refinery capacity in order to maintain world economic growth.

It reaffirmed its vow to invest tens of billions of dollars in new wells and infrastructure.

"The kingdom will work with OPEC countries, other producers and consuming countries towards oil market stability and to avoid the effects of harmful speculation," the Supreme Council of Petroleum and Mineral Affairs said in a statement following a visit by US Vice President Dick Cheney.

Today, Cheney who had met Saudi King Abdullah and the oil minister, said the kingdom had kept its promise to increase oil production capacity over the past three years.

Opec President Chakib Khelil said on Saturday oil prices would range between $80 and $110 a barrel for the rest of 2008. - Reuters