LONDON (AFP) – Oil prices slumped on Monday after spiking to seven-month highs above 70 dollars before the weekend.
New York’s main futures contract, light sweet crude for delivery in July, slid 1.30 dollars to 67.14 dollars a barrel.
New York crude on Friday touched 70.32 dollars, the highest level since November 4.
In early London trade on Monday, Brent North Sea crude for July delivery dropped 1.10 dollars to 67.24 dollars.
Despite the declines, “pricing continues to be very strong and the trade momentum is really resisting downward pressure from the (supply and demand) fundamentals,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz.
“Crude prices are due for a correction but trade momentum will continue to keep pricing at a strong level.”
Shum said the oil prices had been winning support on hopes that the ailing global economy would recover faster than anticipated.
But he also cautioned that there was more supply than demand and this should keep prices in check.
Crude oil will remain priced at around 65 to 70 dollars a barrel until the end of 2009 before rising, Algeria’s Energy Minister Chakib Khelil said on Saturday.
“The market will stay within a band of 65 to 70 dollars until the end of 2009 because (US) fuel consumption will rise in summer, but it is difficult to predict the market,” Khelil said in Algiers, quoted by the local APS agency.
“The price of oil will very probably pass the 70-dollars-a-barrel limit from 2010, as the world economy recovers,” he added.