Oil prices dive on global demand concerns

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  • Wednesday, February 29, 2012
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  • NEW YORK, February 28, 2012 (AFP) - World oil prices sank further on Tuesday as amid concerns that high energy costs could erode demand and hurt the global economy.
    New York's main contract, light sweet crude for April, shed $2.01 to close at $106.55 a barrel.
    In London, Brent North Sea oil for delivery in April settled at $121.55 a barrel, down $2.62 from Monday's closing level.
    "Oil prices have fallen... due to fears that high prices would lead to demand destruction," said Westhouse Securities analyst Andrew Matharu.
    "There are growing expectations that there will be no growth in global demand this year if high prices persist," he added.
    Oil prices fell for a second straight day as traders booked profits from last week's nine-month high levels that had been stoked by intensifying concern over key crude-producing nation Iran.
    "It seems that investors were prompted to some profit taking, following the strong rally in crude oil prices in the last three weeks," Sucden analyst Myrto Sokou said.
    "So, it looks like a healthy correction lower in the oil market, while global equity markets are struggling to find some direction."
    Meanwhile, tensions between Iran and the West over Tehran's controversial nuclear program were expected to continue to further support oil prices, according to analysts.
    "We do not expect any more pronounced or prolonged price correction, as this is countered by the supply risks due to the Iran crisis," Commerzbank analyst Carsten Fritsch said.


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