Oil down on gloomy Fed outlook

21/05/2009

Crude oil prices pared steady gains seen earlier this week and retreated from a six-month high of $62 (£39) a barrel achieved yesterday (May 20th).

On the New York Mercantile Exchange, near-term crude futures fell more than $1.50 on the barrel following the release of minutes from a meeting of the Federal Reserve's Federal Open Market Committee, where the group expressed significant concerns about the prospects for recovery.

"The market has been getting overheated," said Andrey Kryuchenkov, an analyst at VTB Capital in London, speaking to Bloomberg.

"The demand picture hasn't justified the recent gains and now that equity markets are pulling back traders are taking profits in oil," he added.

Heating oil prices also retreated on gains made earlier this week.

News that output from Nigeria has been cut to one million barrels a day failed to spark any concerns about a supply shortage, with weak demand the dominant consideration among buyers.