Oil fell more than a dollar on Tuesday, as profit-taking pulled the market down from record highs that were fuelled by a Mexican supply shut-down and a weak dollar.
U.S. crude fell by $1.30 to $92.23 a barrel by 8:00 a.m. EST after hitting a record high of $93.80 in the previous session. London Brent fell $1.06 cents to $89.26. Brent hit a record peak on Monday of $90.49.
Oil group OPEC has shrugged off calls from importer nations to cool prices by raising crude output, blaming politics and speculation -- not a supply shortfall -- for $90-plus oil.
Please don't blame us for $93 oil, Qatari Oil Minister Abdullah al-Attiyah told reporters on the fringes of an international energy conference in London.
The market is out of control.
OPEC President Mohammed bin Dhaen al-Hamli expressed the group's concern on Tuesday about high oil prices, but said OPEC oil ministers had no plans to discuss further raising output at an OPEC heads of state summit in mid-November in Riyadh.
State oil company Pemex has shut a fifth of Mexico's crude production and halted the bulk of exports because of bad weather. Pemex has said it will resume production after the storms, which are expected to last at least another day.
The disappearance of the short-term factors that have caused oil to spike to $93 should bring prices back to between $80 and $85, said Tom Nelson, who helps manage $2 billion in energy funds for London-based Atkinson Asset Management.
However, as long as the tensions between the U.S. and Iran and the Turkish-Kurd conflict remain, the market will keep a premium, Nelson said.
The U.S. dollar hovered near record lows versus the euro and major currencies on Tuesday, ahead of an expected interest rate cut when the U.S. Federal Reserve's Federal Open Market Committee meets on October 30-31.
The Fed has already cut interest rate cuts to ease liquidity problems in the financial markets triggered by the U.S. subprime crisis. This has helped spur a flood of investor money into commodities, pushing oil toward its inflation-adjusted, all-time peak of $101.70 a barrel in April 1980.
On Wednesday traders will shift focus to weekly U.S. inventory data expected to show crude stocks rose 600,000 barrels in the week to October 26, helping buffer stocks after last week's sharp decline, which kicked off an $8 rise over four days.
Distillate stocks were seen falling by 1.1 million barrels and gasoline stocks down by 300,000 barrels.