Oil prices slip after slumping 10 dollars in two days

LONDON: World oil prices fell again on Thursday after slumping by more than $10 over the past two days on prospects that slowing economic growth would cut into demand for crude, traders said.

New Yorks main oil contract, light sweet crude for August delivery, dipped 56 cents to $134.04 a barrel, after shipping $4.14 on Wednesday. That followed a dive of $6.44 on Tuesday, the sharpest daily decline since January 1991. Londons Brent North Sea oil for September dipped 41 cents to $135.40.

The Brent August contract expired on Wednesday down $2.56 at 136.19. Sucden analyst Nimit Khamar said that the market was supported by strong fundamentals of supply and demand in the long term. However, he added, ôIn the short term there is a real concern about the health of economies globally."

Prices have crumbled since striking record highs above $147 per barrel last Friday. Losses accelerated on Wednesday after a bigger-than-expected rise in US crude reserves, analysts said. ôOil prices fell sharply again (on Wednesday) largely driven by an unexpected weekly rise in US oil and gasoline inventories,ö added Barclays Capital analyst David Woo.

The US governments Energy Information Administration said crude inventories rose by 3.0 million barrels in the week ending July 11. That confounded market expectations for a decline of 2.2 million barrels. ôThe inventory report essentially indicated oil demand in the US is just very poor,ö said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

Traders were also watching developments in the Middle East after what appeared to be a sudden shift in US diplomatic policy toward Iran announced late on Tuesday, which would likely impact the oil market, analysts said. The United States said it was sending Under Secretary of State William Burns to nuclear crisis talks on Saturday between Irans nuclear negotiator, Saeed Jalili, and the European Unions foreign policy chief, Javier Solana.

The US and other Western powers have been locked in a long-running standoff with Iran over its nuclear drive. Iran has repeatedly refused to heed UN demands to suspend uranium enrichment, insisting that its activities are aimed at energy production.