Oil prices dropped in Asian trading on Thursday amid fresh concerns of weakening global growth that could dampen energy demand, analysts said.
A firmer US dollar, which makes dollar-denominated commodities like crude more expensive for foreign buyers, was also a factor behind the weaker oil prices, they said.
New York's main contract, light sweet crude for July delivery, dropped 25 cents to 122.05 dollars a barrel. The contract finished at 122.30 dollars at the close of floor trading in the United States on Wednesday after falling 2.01 dollars.
Brent North Sea crude for July delivery fell 39 cents to 121.71 dollars a barrel following a drop of 2.48 dollars to 122.10 dollars in London on Wednesday.
The Organisation for Economic Cooperation and Development (OECD), which groups 30 of the world's leading industrialised nations, slashed its growth forecast on Wednesday.
The move raised fresh worries that energy demand would weaken, analysts said.
"It is very clear that the OECD countries are going to see soft demand," said Jason Feer, vice president of energy market analysts Argus Media Ltd in Singapore.
"All that is very bearish in terms of energy demand," he said.
The OECD in a twice-yearly survey said its member economies were confronting "three adverse shocks" -- financial market uncertainty, a housing downturn and soaring food and energy prices.
It predicted that momentum in the industrialised world would slow to 1.8 percent this year, from 2.7 percent in 2007, and to 1.7 percent in 2009.
The OECD said the US economy was expected to remain sluggish all year before staging a gradual recovery in 2009.
Latest figures from the US Department of Energy (DoE) showing a bigger-than-expected rise in petrol reserves was also a sign of slowing demand, dealers said.
"In the US, people are not used to gasoline being four dollars (a gallon)," said Feer.
The DoE said in its weekly report Wednesday that petrol reserves increased 2.9 million barrels in the week ending May 30 against expectations for a gain of 825,000 barrels.
Analysts said the figures pointed towards slowing demand in the world's biggest energy-consuming nation as consumers recoil from high gasoline prices.
"The market focus is currently more on the inflows of demand destruction news," said Petromatrix analyst Olivier Jakob.
India's government on Wednesday boosted fuel prices again to stem huge losses at state-run oil firms, stirring widespread political anger and worries about higher inflation.
Malaysia announced similar moves as the government there sought to ease the massive burden of fuel subsidies.
Despite recent losses, oil prices have still gained almost a quarter since they smashed through 100 dollars per barrel at the start of 2008, and traders remain worried that the high cost could erode global energy demand.
Eleven nations that guzzle nearly two-thirds of the world's energy will hold talks in northern Japan this weekend, seeking ways to secure enough supply and reduce consumption after oil prices hit record highs.
The June 7-8 ministerial meeting brings together China, India, South Korea, and the Group of Eight (G8) industrialised nations.
Date created : 2008-06-05