LONDON (AFP) - World oil prices skidded lower in volatile trading as traders banked fat profits from a record-breaking streak and reacted nervously to recent signs of a possible slowdown in demand.
The price of reference light sweet crude for delivery in November fell by 34 cents to 53.15 dollars a barrel in early trading on the New York Mercantile Exchange.
US crude oil futures sank to as low as 52.59 dollars a barrel earlier in the day, showing a loss of about five percent from an all-time high 55.33 dollars seen on Monday.
In London Brent North Sea crude oil for December delivery lost 34 cents to 48.57 dollars in late deals, a day after tumbling by 1.02 dollars.
"It's just profit-taking," said Investec Securities analyst Bruce Evers.
"There are also a few concerns about the high oil price affecting economic growth, though any real impact is yet to be seen," he added, noting two recent reports had also pointed to lower-than-expected oil demand next year.
The Organization of Petroleum Exporting Countries on Monday pared down its growth projection for 2005 oil demand by 130,000 barrels a day (bpd) to 1.61 million bpd as high prices deter consumption.
And the Paris-based International Energy Agency forecast last week that global oil demand growth would slow sharply next year to 1.45 million bpd, or 1.8 percent, from 2.71 million, or 3.4 percent, this year.
Nevertheless, several analysts said prices were expected to resume their upward march in the coming days.
"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 will publish its latest weekly estimate of US commercial oil inventories on Wednesday.
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.