LONDON (AFP) - Oil prices slid for a third day running as speculators banked profits ahead of next week's US presidential election amid easing supply fears and China's move to hike interest rates, analysts said.
New York's main contract, light sweet crude for delivery in December, edged down two cents to 50.90 dollars a barrel in electronic trading.
In London the price of Brent North Sea crude oil for delivery in December lost 29 cents to 48.08 dollars a barrel in early deals.
New York's main contract tumbled 1.54 dollars, or 2.9 percent, to finish at 50.92 dollars a barrel on Thursday, a loss of 7.7 percent since Tuesday's close.
"Prices have been falling since Wednesday as speculative funds exit the market" ahead of next Tuesday's dead-locked US presidential vote, Societe Generale analyst Frederic Lasserre said.
He added that a win for Democrat candidate John Kerry could send prices further down as it could mean a change of US policy in major oil producer Iraq.
Global crude oil prices began tumbling when a government survey published Wednesday showed US commercial crude oil inventories surging by a bigger than expected 4.0 million barrels the previous week.
Supply nerves calmed further on a US Department of Interior report showing an improvement in output from the Gulf of Mexico, where hurricane-triggered landslides had buried oil platform pipeline networks.
News that China, a voracious oil consumer, had raised interest rates Thursday for the first time in nearly a decade to brake activity helped also to push prices down.
"China's decision to raise interest rates for the first time in nine years, as it attempts to slow the rampant economic growth that has played a key role in boosting world oil demand, helped reverse the mid-session (oil) rally," said analysts at the Sucden brokerage.
"Surging Chinese consumption has played a key part in global energy demand and sustaining this year's price rally."
But Barclays Capital analyst Kevin Norrish said the impact of China's rate hike on oil demand had been "overestimated".
He said: "China's oil demand is, to an extent, sheltered from a slowdown in general economic growth. Widespread power cuts in many regions means that demand for energy is already being rationed and that the economy has room to slow down considerably to bring it into line with energy availability."
China's central bank has raised its benchmark one-year lending rate to 5.58 percent from 5.31 percent. The one-year deposit rate was hiked, also by 27 basis points, to 2.25 percent.
Ng Weng Hoong, editor of industry publication EnergyAsia.com, said market projections for oil prices to hit 60 dollars during the last two months of the year were now wide of the mark.
"A push towards 60 dollars in such a short time would require a lot more conviction as the near-term trend favours profit taking," he said.
Ng said a combination of a harsher-than-expected northern hemisphere winter, a major terrorist strike and political unrest in key oil producing nations was necessary to propel prices to the 60-dollar level.
World oil prices have surged by about two-thirds since the start of this year, driven by strong demand, notably from China, and global production strains.
Adjusted for inflation, however, prices remain well below the levels reached in the wake of the 1979 Iranian revolution when prices surged beyond the equivalent of 80 dollars a barrel in today's money.
10/29/2004 - 12:01 GMT - AFP