Oil prices ease after hitting high

Oil prices today eased back from yesterday’s record highs as fears faded over major disruption to Mexico’s oil production.

The cost of light sweet crude for December fell 75 cents to 92.78 US dollars a barrel in early Asian electronic trading on the New York Mercantile Exchange.

Oil had hit a new record yesterday of 93.53 US dollars a barrel on news that Mexico had shut a fifth of its production because of a storm, having reached as high as 93.80 US dollars in intraday trading.

But concerns over lengthy production stoppages were allayed as market experts said the disruption to Mexico’s State-owned oil company Petroleos Mexicanos - one of America’s largest suppliers – was likely only to be temporary.

The weakening of the US dollar also put pressure on oil prices, with expectations for another cut in US interest rates sending the currency to a record low against the euro.

The dollar also came within a whisker of fresh 26-year highs against the pound yesterday – trading above 2.06 dollars to the pound for the first time in three months – before falling back later in the day.

Escalating tensions in the Middle East have added to concerns over global oil supply.

Prices have been inflated by fighting in Turkey between armed forces and Kurdish rebels, as well as last week’s move by the US government to impose harsh penalties against Iran, which is the world’s fourth largest oil producer.

There have been fears that the combination of factors could see oil reach as high as 100 US dollars a barrel.

Today’s drop in the cost of crude will come as a welcome fall further from the 100 dollar milestone.