by Perrine Faye
LONDON - World oil prices fell on profit taking on Friday, following a surge in oil prices this week and cooler temperatures in the northern hemisphere, dealers said.
New York`s main contract, light sweet crude for delivery in April, dropped 38 cents to 53.16 dollars a barrel in electronic deals.
In London, the price of Brent North Sea crude oil for delivery in April shed 60 cents to 52.06 dollars a barrel.
On Wednesday, New York futures came within three cents of beating last October`s record high of 55.67 dollars, while London crude shot up to a new record of 54.05 dollars a barrel.
There has been "quite a big downward move this morning" on Friday as "speculators are taking profits and funds have also started to liquidate their long positions," according to Lee Elliott, analyst with GNI-Man Financial.
Markets were late to acknowledge Wednesday`s bigger-than-expected rise in US crude stocks, he added.
"There`s been a swing in the US crude oil inventories. This and the end of the cold spell (in the US northeast and parts of Europe) are the keys to the reversal this morning," he added.
Crude oil supplies rose 3.2 million barrels to 302.6 million in the week ending March 4, the US Department of Energy (DoE) said.
Reserves of distillates, which include heating oil and diesel fuel, dropped 800,000 barrels to 109.2 million, as the cold wave heightened demand for heating oil, while gasoline stocks dipped by 200,000 barrels in the past week to 224.3 million, the DoE said.
Oil prices fell "as investors took profits" and "as high US stockpiles and a sinking dollar weighed on the market," analysts at the Sucden brokerage firm said.
Meanwhile, traders were digesting a report from the International Energy Agency (IEA) on Friday, which forecast a strong rise in demand.
Demand for oil this year would be 330,000 barrels per day higher than expected because of cold weather, expected robust growth in the United States and consumption in China, the IEA forecast.
The agency raised its estimate for global oil demand in 2005 to 84.3 million barrels per day.
It revised upwards its estimate of global demand for oil from OPEC this year by 200,000 barrels per day to 28.6 million barrels. This was half a million barrels more than the 2004 global demand figure of 28.1 million barrels.
Analysts dismissed the effect of the report on the market.
"It is no surprise. We expect the unexpected now," Elliott said.
Attention was also focusing on the meeting of the Organisation of Petroleum Exporting Countries (OPEC) on Wednesday in Isfahan, Iran, where the cartel is expected to maintain crude output at 27 million barrels per day.
03/11/2005 11:40 GMT