World oil prices tumble sharply

World oil prices slumped dram-atically yesterday as a stronger dollar and growing gloom over the global economic outlook caused sizeable profit-taking, traders said. New York's main contract, West Texas Intermediate (WTI) for delivery in August, tumbled as low as $92.67 (Dh340.4) a barrel. It later stood at $93.09, down a hefty $2.32 from Wednesday's closing level. Brent North Sea crude for August meanwhile dived $3.09 to $111.12 a barrel in midday deals. Prices had rallied sharply on Wednesday, as news of tumbling US crude and gasoline reserves sparked hopes of resurgent demand in the United States, which is the world's biggest oil consuming nation. Article continues below However, the market hit reverse gear yesterday as the Federal Reserve downgraded its US economic growth forecast, while downbeat Chinese manufacturing data sparked concern about demand from the Asian powerhouse economy. Headwinds Fed chairman Ben Bernanke also warned of stubborn economic headwinds that could persist for longer than expected. The dollar won support after the Fed confirmed that its second round of bond-buying will end later this month — signalling that there would be no further stimulus measures. The euro also remains dogged by worries the Greek-Eurozone debt crisis could spread. "Following Bernanke's comments, a weaker outlook for the US economy and a stronger US dollar, crude oil prices are under pressure, on a downside momentum," said analyst Myrto Sokou at the Sucden Financial Research brokerage. "The market sentiment has been hurt as the US dollar rallied with Brent retreating more than three per cent and WTI crude more than two per cent lower, amid (the) weaker US oil demand outlook." A stronger greenback makes dollar-prices commodities more expensive for buyers using weaker currencies. This tends to dent demand and weigh on prices.