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Oil prices turn higher in Asian trade

world Updated: Jul 28, 2008 09:03 IST

World oil prices turned higher in Asian trade on Monday, while the market remains faced with signs of slowing demand and rising supply, analysts said.

New York's main contract, light sweet crude for September delivery, rose 45 cents to 123.71 dollars a barrel.

The contract dropped 2.23 dollars to close at 123.26 on the New York Mercantile Exchange on Friday.

The benchmark New York contract has lost more than 23 dollars since striking an all-time high above 147 dollars on July 11.

"A large part of that is just a shift in market sentiment focussed on the soft trend in US consumption, and the belief that Saudi Arabia has increased production," said David Moore of the Commonwealth Bank of Australia.

Prices have eased recently while concerns mount about demand for oil in the face of prolonged weakness in the US economy, the world's biggest energy consumer, analysts said.

Saudi Arabia is the largest producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel, which produces about 40 percent of the world's oil.

Oil prices broke through the 100-dollar level at the start of the year and then rose to a series of record highs on concerns about supply, stoked in part by tensions between the West and Iran over that country's nuclear programme.

Unrest in key African producer Nigeria was another factor, analysts said.

The price of oil could drop to between 70 and 80 dollars a barrel if the US dollar strengthens and concerns over Iran are reduced, OPEC chief Chakib Khelil said on Saturday.

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