Oil prices drop below $116

25 April 2008

Oil prices in New York (NY) fell on Friday morning due to a rallying dollar and increasing US crude stockpiles led dealers to lock in profits, according to reports.

Light crude prices for June delivery dropped slightly to $115.60 (£58.7) per barrel, its main futures contract.

At the NY Mercantile Exchange the benchmark had closed at around £58.9 on Thursday.

On the foreign exchange, the dollar found new strength as rumours abounded that the US Federal Reserve would not make any further interest rate cuts; this could make crude priced by the dollar more expensive to buy for foreign investors.

"Oil's bull run is taking a pause," Victor Shum, an energy analyst with Purvin & Gertz in Singapore, told Associated Press (AP).

"Oil pricing has simply gained too much, too fast, and so this profit-taking activity is much deserved."

Brent crude futures rose slightly on the London ICE Futures exchange.

Canadian bank CIBC predicted recently that the price of crude would soar to more than 76 pounds a barrel by 2010 as pressures were put on supplies, AP reported.

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