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Oil prices end tumultuous year on calm note, down slightly

business Updated: Dec 31, 2008 09:01 IST
AFP
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Oil prices ended the year on a calm note Wednesday, slightly lower after a tumultuous 2008 which saw prices hit record peaks before plunging to multi-year lows.

New York's main futures contract, light sweet crude for February delivery, eased 13 cents to 38.90 dollars a barrel after falling 99 cents to 39.03 dollars on Tuesday at the New York Mercantile Exchange.

Brent North Sea crude for February delivery fell six cents to 40.09 dollars a barrel after shedding 40 cents to 40.15 on Tuesday in London.

Prices soared in the first half of the year, reaching record highs above 147 dollars a barrel in July, before a sharp global economic downturn slashed world demand for energy and pulled prices sharply lower.

New York crude plunged earlier this month to below 33 dollars, its lowest point for almost five years.

"The market had a pretty torrid few months, a hell of a lot of uncertainty," said Mark Pervan, senior commodities analyst for ANZ bank in Melbourne.

Current prices, though, do not reflect actual market conditions, said Phil Flynn, an analyst at Alaron Trading.

"It is probably not productive to search too deeply for the rationale behind market movements at this time of year because they are generally more expressive of accounting necessities than market sentiment," he said.

But some analysts saw an influence from Israel's assault on Hamas in the Gaza Strip. Israel began a massive bombardment of Hamas targets in Gaza on Saturday in response to ongoing rocket fire from the territory, fuelling fears of wider tensions in the oil-rich Middle East,

Pervan said traders were using the fighting as an excuse to buy on weakness in oil prices in an oversold market.

With recession curbing the world's appetite for energy, analysts say, prices risk slumping further in 2009.

Pervan said he expected prices to fall a little lower in January before bottoming out in February and improving in March or April.

"There is no quick fix, quick recovery in the near term," Pervan said, referring to the global economic slump.

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