Oil price down as Iraq fear eases

Oil traders had initially thought Iraqi exports would be badly hit

Global oil prices have fallen in Friday trading on the news that an attack on an Iraqi export pipeline was not as serious as earlier thought.

The price of benchmark US light sweet crude fell $1.96 to settle at $105.62 a barrel while Brent crude lost $1.23 to $103.77 at end of London's trading day.

"The [Iraqi] problem is not as serious as we thought," said oil analyst David Johnson of Macquarie Research.

A slightly stronger dollar had also lessened demand, analysts said.

Banking worries

The attack on the pipeline in Basra came earlier in the week as Iraqi government forces continued their assault on militias in the city and surrounding areas.

Last week US light crude hit a record high of $109.72 a barrel, driven by the continuing weak dollar.

Meanwhile the dollar was volatile in Friday trading, as continuing worries over the health of the US banking sector was tempered by positive news that the rate at which commercial banks lend to each other had come down slightly.

A weaker dollar generally increases the price of commodities such as oil and gold, as investors see them as a haven for their funds.

The dollar had edged higher against the euro and the pound, erasing earlier falls.

One euro was worth $1.5797, while sterling dropped below $2 at $1.9948.

But the dollar's gains were expected to be short-lived ahead of a week brimming with key US economic data, including March employment figures.

The dollar hit a record low against the euro of $1.5904 earlier this month.