Crude prices declined more than $2 a barrel on Thursday as traders sold on profit taking and the dollar rallied against the euro.
Some analysts attributed today's crude losses to the fact that a rise of 16 percent in this month is not justified by inventories and demand. Oil's consumption is down 1.3 percent from a year earlier, on an average of 20.3 million barrels per day in the past four weeks, a report from the Energy Department showed on Wednesday.
Crude futures for July delivery fell $2.52 or 1.89 percent to $130.65 a barrel by 3:38 p.m. in the New York Mercantile Exchange today. On Thursday prices reached a new record of $135.09 a barrel.
Yesterday prices rose surpassing $131 for the first time after the U.S. Energy Department said crude inventories increased 5.4 million barrels the last week.
Brent crude for three months delivery fell 68 cents or 0.52 percent to $129.93 on the London ICE Futures Exchange.
The dollar recovered against the euro and major currencies today on profit-taking after the euro's strong gains this week, according to analysts. The euro fell 0.45 percent to $1.5723 per dollar. A falling U.S. currency rose demand for commodities including oil which was bought to compensate for inflation.
As for supplies, The Organization of Petroleum Exporting Countries is not likely to increase production saying supplies in the market are enough to meet demand.
In addition, the International Energy agency may cut its oil supply forecast on concerns that aging oil fields and lower investments could limit company's production, the Wall Street Journal reported today.