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Last Updated: Thursday, 10 March, 2005, 23:18 GMT
Oil prices fall back from highs
Petrol station price board
The high oil price has pushed up raw material and petrol costs
The price of crude oil fell back from record highs on Thursday in response to profit-taking and news of a drop in Chinese buying.

Brent crude shed 72 cents to close at $52.66 a barrel, while US light crude dropped 1.23 cents to $53.54.

Wednesday had seen Brent hit a record $54.30, while US oil's $55.65 peak was within two cents of its all-time high.

Cold weather in the US and Europe had come just as new figures showed demand was soaring.

But the news that China's oil imports dropped by 13% in the first two months of the year helped ease worries about a supply crunch, and fuelled profit-taking.

Market moves

The fall of the dollar has pushed up oil prices in recent weeks, as speculators move out of currencies and into the commodity market.

A falling greenback also cuts the dollar-denominated cost of crude for many consumer nations and funds, prompting them to increase holdings and compete for limited supplies.

Many analysts are focusing on the fact that oil prices stayed high, despite a report from the US Energy Information Administration (EIA) that showed commercial crude oil inventories were at an eight-month high.

According to the EIA, commercial crude stocks rose to a higher than expected 302.6 million barrels in the week ended 4 March, the first time they have topped 300 million barrels since last July.

But the EIA is also worried about ongoing supply, cutting back on its estimate of production outside the 11 members of Opec, who pump a third of the world's oil.

The EIA has also raised its forecast for demand during 2005.

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