LONDON: US crude oil slipped below $72 a barrel on Friday, after three days of gains, as investors questioned whether the pace of demand recovery justified current prices. US crude for October delivery was down 26 cents at $71.68 a barrel by 1142 GMT. London Brent crude fell 21 cents to $69.65 a barrel. The whole environment seems to be very positive but the market needs at some point to take a step back and ask whether these kinds of fundamentals are really supportive of these kinds of prices, said Commerzbank analyst Eugen Weinberg. Oil hit a year-high of $75 a barrel in late August, from below $33 a barrel in December, as global oil demand recovered. The International Energy Agency said it expected oil demand to rise this year and next as the global economy recovers, but also said oil stocks in the big developed countries of the OECD were up 4.6 percent in July versus a year ago. Weinberg said the IEA s oil stock data indicated that crude s recent rally might not justify fundamentals and was weighing on crude prices. (It s) also a question of current oil stocks world wide, which are still at very high levels, he said. The Energy Information Administration reported US crude inventories fell by a larger-than-expected 5.9 million barrels last week. But inventories of gasoline and middle distillates rose, and analysts said the oil products supply build would probably offset the bullish impact of the large crude draw. Dollar weakness The dollar index, a measure of the US unit s performance against six other major currencies, was on track for its steepest weekly decline in almost four months, briefly falling as low as 76.548, its lowest since September 2008. The secretary-general of the Organization of the Petroleum Exporting Countries, which met in Vienna this week, said the falling dollar had become a concern for the group and could necessitate higher oil prices. The dollar s slide has helped crude gain more than 5 percent so far this week, but an analyst at Commonwealth Bank said oil was unlikely to get much more upward momentum from the greenback. Our forecast for currencies is for dollar depreciation - a lot of that has occurred already and while depreciation has been an upside driver, that influence may be weakening, said David Moore, commodities strategist at Commonwealth Bank in Sydney. Meanwhile, data on Friday showed China s crude oil imports in August surged about 25 percent to a near record high of 19.6 million tons or around 4.6 million barrels. At its meeting in Vienna this week, OPEC kept output unchanged, as many analysts had expected, but signaled compliance with output curbs would become a greater focus.
