LONDON - A rebound in the value of the US dollar has helped oil prices to retreat from recent highs, dealers said Tuesday.
In London, early Tuesday trade saw the cost of a barrel of Britains North Sea benchmark Brent crude slide more than USD 1.30 dollars to USD 52.60 after a four-day public holiday weekend.
US prices closed at USD 53.68 dollars yesterday, below the 17 March peak of USD 56.15.
Expectations of higher US interest rates have led speculators to switch their attention away from the oil market to focus on the rising dollar, the dealers added.
Reassurance yesterday from UK oil giant British Petroleum (BP) that an explosion at its Texas refinery, in the US, a week earlier, would not affect its US petrol (gasoline) supplies also eased upward price pressures.
The dollar reached a level of 107.38 yen in Tokyo this morning, a five-month high, while yesterday had seen the US currency reach its strongest level for six weeks against the single European currency (euro).
However, the oil price still remains almost 25 percent up on the beginning of the year, and demand remains strong.
In mid-March, OPEC agreed to increase oil production by 500,000 barrels a day.
There had been talk, particularly by Saudi Arabia, of raising production levels again.
China, where the breakneck economy has a growing thirst for energy, is forecasting a 10 percent rise in petroleum demand in 2005 with economic growth remaining close to nine percent.
Some analysts have suggested China could impose a 20-50 percent tax on petrol in order to damp down retail demand, although industry is driving most of its energy usage.
In the US, meanwhile, the average price of gasoline has reached a new record of USD 2.15 a gallon, with the cost at the pump soaring way beyond that level in many high-demand areas.
Adjusted for inflation, however, US fuel costs remain well below the historic high of USD 3.08 a gallon reached in 1981. The improvement of the weather in the northern hemisphere has also helped to reduce demand for fuel oil.
Meanwhile, some dealers referred to the continuing shortage in refinery plants in western countries, an issue which was among factors leading to the recent upsurge in prices.

KUNA