(Updates throughout, changes dateline from LONDON)
NEW YORK, March 6 (Reuters) - Oil prices fell on Thursday
as traders took profits from a record rally near $106 a barrel
that was fueled by the weak dollar and OPEC's decision to hold
crude output steady.
Strong U.S. gasoline supplies, now at 14-year highs, also
helped weigh on prices as speculators across many commodities
trimmed their positions.
U.S. oil <CLc1> traded down $1.36 at $103.16 a barrel, off
the record $105.97 a barrel struck earlier in the day.
London Brent crude <LCOc1> fell $1.12 to $100.52 a barrel,
after hitting a record $102.95.
Traders began to take profits after oil settled $5 higher
on Wednesday, marking oil's single biggest price gain in
absolute dollar terms, according to Reuters database EcoWin,
although there have been larger daily percentage price gains.
"Looks like some profit taking in crude and other
commodities," said Tom Bentz, an analyst at BNP Paribas
Commodity Futures Inc.
A rise in speculative buying as investors seek a hedge
against inflation and the tumbling dollar have helped propel
oil to record levels.
The dollar extended losses against the euro and the yen on
Thursday after U.S. pending home sales were reported unchanged
in January, doing little to allay investor worries over the
deteriorating U.S. economic outlook. []
"The crude squeeze continues. The sharp rise in crude was
exacerbated by a weak U.S. dollar, OPEC's decision to stand
still," Citigroup said in a research note.
OPEC HOLD
The Organization of Petroleum Exporting Countries agreed to
hold production at current levels on Wednesday, despite calls
from the Untied States to increase output to help consumers
already battered by the mortgage crisis and the credit crunch.
Cartel members insist oil markets are well supplied and
blame the surge in prices on speculators and the "mismanagement" of the U.S. economy.
A U.S. government report Wednesday showed crude stocks in
the world's largest consumer fell by 3.1 million barrels last
week, against analysts' forecasts for an increase.
Distillate inventories, including heating oil, fell 4.8
million barrels, dropping for the fourth consecutive week, as
colder weather hit the U.S. Northeast, while gasoline stocks
rose for the 17th straight week. []
OPEC will next meet in September to assess production
levels and evaluate the market, although ministers could confer
informally at a conference between consumers and producers in
Rome on April 20-22.
"This suggests to me the cartel would allow prices to move
sharply higher without adding extra barrels to the
marketplace," Robert Laughlin of MF Global said in a report.
Tensions between OPEC member Venezuela, a top oil exporter
to the United States, and neighbor Colombia provided further
support to the market. []
Venezuela deployed forces toward the Colombian border on
Wednesday, after a crisis erupted last weekend when Colombia
launched a raid against rebels inside OPEC member Ecuador.
(Additional reporting by Maryelle Demongeot in Singapore;
Ikuko Kao in London and Robert Gibbons and Matthew Robinson in
New York; editing by Walter Bagley)
