Profit taking causes oil to fall

31 October 2007

Crude oil prices slumped on Tuesday as investors looked to cash in on the recent record highs.

Tensions in the Middle East and continuing supply fears saw the price of US crude close at $93.53 (£45.12) on Monday - a figure which some analysts believe was an inflation-adjusted all-time high.

Investment bank Goldman Sachs reacted by advising its customers to think about taking the profits on offer, even though its analysts do not think Monday's price represented a peak.

"We are not trying to call a top here, just take profits from a tactical perspective, as prices could continue to rise in the coming weeks," read a report by the bank.

The ensuing flurry of selling saw the price of US crude drop $3.15 to close at $90.38, while London Brent crude lost $2.88 to settle at $87.44.

Despite the falls, the price of crude oil remains around 50 per cent higher than it was at the start of the year.