Oil prices eased to below $79 a barrel today, as tropical storm Ida, which cut US oil and gas supplies, was downgraded from a powerful hurricane and US crude oil stockpiles were forecast to rise slightly.
A surge in global equities that cemented hopes of an economic recovery and a sharp fall in the dollar helped temper oil's drop.
US crude for December delivery dropped 39 cents to $79.04 a barrel, after settling up $2 yesterday.
London Brent crude dipped 33 cents to $77.44.
Although oil prices have risen 77 per cent so far this year, they are still nearly 47 per cent below their high of more than $147 a barrel struck in July last year.
A bigger-than-expected increase in China's pump prices yesterday suggested that Beijing saw little danger of the inflationary worries that beset price rise decisions as little as a year ago.
The 7-per cent rise in China's retail gasoline and diesel prices, or 480 yuan ($70.32) per tonne, is not seen curbing Chinese oil demand, which is instead expected to grow and support global oil markets.
On signs of strong Chinese oil needs, crude oil imports via the China-Kazakhstan pipeline increased 20.2 per cent from a year ago to 147,750 barrels per day by October 24th, China's customs said.
Ida, the first real storm threat of the 2009 season, was downgraded from a hurricane yesterday, but production remained curtailed as producers waited for the storm to pass over the Gulf.
Ida shut in 29.6 per cent of oil production and 27.5 per cent of gas output from the Gulf of Mexico, the US Minerals Management Service said.
Industry group American Petroleum Institute (API) will release weekly inventory data later today, while a report from the US Energy Information Administration (EIA) will be delayed from tomorrow to Thursday due to a holiday.
Reuters