LONDON, Mar 20 – Oil prices eased on Friday after surging close to $52 per barrel the previous day following a dramatic US central bank move to inject one trillion dollars into the financial system.
New York\’s main futures contract, light sweet crude for delivery in April, fell 99 cents to $50.62 a barrel after rocketing by $3.47 the previous day.
The contract had Thursday surged to $52.25 – the highest level since November 28 last year – after topping $50 for the first time in four months.
Elsewhere on Friday, Brent North Sea crude for May delivery handed back 65 cents to $50.02 after jumping $3.01 on Thursday.
"A threat of pre-weekend profit-taking still exists," warned VTB Capital analyst Andrey Kryuchenkov, indicating that prices could head even lower.
Crude futures had won a major boost on Thursday as optimism grew over the US Federal Reserve\’s plan to lift the world\’s biggest energy consuming nation out of a deep recession.
The Fed said this week that it would inject 1.15 trillion dollars to boost the financial system of the world\’s biggest economy.
Meanwhile on Friday, the dollar fell on profit-taking after recent strong gains for the US currency in reaction to the Fed\’s move.
"With the US dollar weakening against other currencies this week, the inverse relationship between dollar strength and oil prices has re-emerged," said Dresdner Kleinwort analyst Eugen Weinberg.
A weaker greenback tends to boost oil prices because it makes dollar-priced crude cheaper for buyers using stronger currencies.
At the start of the week, prices had fallen on lingering disappointment over OPEC\’s decision to hold current production levels amid a spreading global recession, dealers said.
The Organization of the Petroleum Exporting Countries (OPEC) opted on Sunday in Vienna to leave members\’ production quotas unchanged – and blamed the global economic slowdown for the decision.
The 12-nation cartel explained it wanted to concentrate on compliance with reductions in output quotas decided in the final months of 2008, which represented a cut since September of a combined 4.2 million barrels per day.
OPEC chose to delay any decision and called an extraordinary meeting for May 28, when ministers will reconvene in the Austrian capital to assess the market situation.
The market was also weighed down Wednesday by news of a larger-than-expected increase in US energy reserves that highlighted weak American energy demand, but trimmed losses after news of the Fed plan.