Page last updated at 20:44 GMT, Tuesday, 19 May 2009 21:44 UK

Oil prices dip on US housing data

Work is underway at a new oil well in Bahrain
A rebound in the stock markets has helped the oil price

Oil prices have dipped from a six-month high after weak housing data was released by the US Commerce Department.

Oil had earlier risen to $60.48 a barrel amid renewed hopes of a recovery in the US economy.

US crude ended the day at $59.65, while London Brent crude lost early gains to settle at $58.92 a barrel.

New US housing starts fell 12.8% in April to an annual rate of 458,000 units - the lowest on record, denting investors' new-found optimism.

Oil prices have risen about 20% from $50 a barrel over the last three weeks as optimism about the state of the world economy has grown.

Oil has jumped from $32 a barrel in January, but it remains well below the record high of $147 touched last July.

'Stark reminder'

A strong US economy can benefit the price of oil - both because of increased domestic demand but also because it is a major export market for many countries.

"The housing starts is kind of a stark reminder that there are still problems out there," said Phil Flynn at Alaron Trading.

There are also continued fears that attacks on oil facilities in Nigeria could hit supplies.

On Monday, oil prices rose after militants in Nigeria, Africa's leading oil producer, attacked two oil pipelines in the southern Niger Delta.

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