LONDON - World oil prices fell by nearly a dollar on Wednesday amid profit taking as traders awaited the latest weekly snapshot of US crude stocks data.
New York's main contract, light sweet crude for delivery in May, dropped 97 cents to 55.06 dollars a barrel in electronic dealing.
In London, the price of Brent North Sea crude oil for delivery in May shed 99 cents to 53.60 dollars a barrel.
Oil prices reached a record high of 57.60 dollars a barrel last Thursday in New York but fell sharply on Tuesday after a further hike in US interest rates.
"The market is a little bit weaker. One of the reasons being given is the interest rates increase in the States yesterday which caused the dollar to strengthen," Bache Financial trader Christopher Bellew said.
The dollar firmed against major currencies on Wednesday, the day after the US Federal Reserve raised its key interest rate by a quarter point to 2.75 percent, coupled with a hawkish statement on the dangers of creeping inflation.
A stronger dollar meant that many traders were taking profits to cash in on gains made from the rising US currency.
"That may have contributed to the weakness but a lot of it is a combination of the facts that the (speculative) funds are heavily long, the gasoline stocks are very adequate, and OPEC have shown resolve to increase supply," Bellew added.
Meanwhile inventory data, due to be published by the US Department of Energy later Wednesday, was to provide an outlook on stockpiles of the country's crude oil, distillates and gasoline.
Analysts expected a rise of 2.0 million barrels in crude oil stocks, combined with a fall of 1.4 million barrels of gasoline reserves and 1.2 million barrels of distillates, including heating fuels.
Gasoline inventories fell over the last two weeks but remained 10 percent higher than at the same time last year.
"Traders are starting to look to towards the seasonal switch from heating oil to gasoline in preparation for the high mileage summer driving season in the US," analysts at the Sucden brokerage firm said.
Gasoline, or petrol, is in strong demand ahead of the driving season when Americans take to the roads for their vacations.
In addition, traders were expecting another possible rise in crude production from the Organization of Petroleum Exporting Countries after the cartel raised its output to 27.5 million barrels a day last week.
"The OPEC cartel is still mulling over a decision of whether to increase production by another 500,000 bpd to reduce prices," Sucden analysts added.
03/23/2005 13:27 GMT