LONDON (AFP) - World oil prices fell sharply, dropping below 53 dollars in New York on profit-taking, but analysts said the fall was likely to be brief on a market worried about supply disruptions.
The price of reference light sweet crude for delivery in November fell by 77 cents to 52.90 dollars a barrel in electronic trading on the New York Mercantile Exchange.
US crude oil futures were nursing a loss of over two dollars a barrel from an all-time high 55.33 dollars seen in electronic deals on Monday, as investors locked away profits from a record-setting run.
In London, Brent North Sea crude oil for December delivery lost 40 cents to 48.51 dollars in early deals on Tuesday, a day after tumbling by 1.02 dollars.
"Although the big price correction in crude of the past 24 hours means that the market now looks weak from a technical perspective, little has changed in fundamental market dynamics to yet suggest that the upward price trend in crude oil is over," Barclays Capital analyst Kevin Norrish said.
He added that prices had tumbled as traders squared their long, or bought, positions in gasoline futures.
"Funds reduced their exposure to a market that has looked increasingly well supplied in recent weeks as US (gasoline) inventory levels have moved back up above normal levels for the time of year," Norrish added.
While stocks of US gasoline have recovered, inventories of distillates -- mostly diesel and heating oil -- have dropped heavily in recent weeks following supply problems in the Gulf of Mexico caused by Hurricane Ivan.
This has left markets worried with winter fast approaching in the northern hemisphere.
The US Energy Department was to publish its latest weekly estimate of US commercial oil inventories on Wednesday.
Inventories of distillates -- mostly diesel and heating oil -- dropped 2.5 million barrels to 120.9 million in the week to October 8, the US Energy Department said.
By Monday, oil prices had soared by almost 70 percent in New York so far this year, owing to supply disruptions and soaring global demand, particularly from China and India.
"There's still a lot of strength in the market so what we are seeing is just a blip," said S.R. Eswaran, the Singapore-based editorial manager of oil consultancy Platts.
"When the market breaks a psychological barrier, there will generally be repercussions but (the price of oil) will rebound again."
Adjusted for inflation, oil prices remain far below the levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today's money.