Oil prices retreated Friday following a promise by the US Federal Reserve Chairman Ben Bernanke to act aggressively to counter economic woes. Light, sweet crude for February delivery dropped 52 cents to $93.19 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Europe. Earlier in the day, a fire aboard an oil tanker in Nigeria and attacks on six oil industry ships by Nigerian rebels helped to push prices above $94. The contract fell $1.96 to settle at $93.71 a barrel on Thursday after several big retail chains said holiday sales in the United States were weaker than expected, raising new worries about consumer spending. In London, Brent crude futures dropped 54 cents to $91.68 a barrel on the ICE Futures exchange. Federal Reserve Chairman Ben Bernanke s comments that the central bank is ready to cut interest rates to help stave off a recession raised chances the Fed will cut rates by a half percentage point when it meets at the end of January. The speech by Bernanke yesterday has been a soothing tonic and the market is now reacting to the fact that the broadly expected US slowdown may not turn out to be as serious, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. The threats to oil demand growth slowdown may be limited. Lower rates tend to weaken the dollar, giving investors further reason to buy oil. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. The looming possibility of a US economic slowdown that would crimp demand for oil overshadowed the attack on six oil industry ships by Nigerian rebels. I would have anticipated we might have seen more oil price reaction to that sort of development, said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. Shum said the market showed little reaction to the attacks in Nigeria because the concerns about the state of the US economy are serious and widespread and far outweigh the geopolitical tensions. Militants in Nigeria said Friday they remotely detonated an explosive device placed on a docked ship, and authorities said two people were injured in the incident in restive southern Nigeria. No deaths were recorded when the vessel at a port caught fire, sending smoke high into the sky, said a Rivers State police spokeswoman, Ireju Barasua. Heating oil futures dropped three-fifths of a cent to $2.5511 a gallon while gasoline fell 1.74 cents to $2.3427 a gallon. Natural gas futures rose 8.9 cents to $8.348 per 1,000 cubic feet. Associated Press writer Gillian Wong in Singapore contributed to this report.
