January 08, 2008	Tuesday	Zilhaj 28, 1428

LONDON, Jan 7: Oil prices fell sharply away from their historic highs of above 100 dollars on Monday as traders took profits amid fears that slower US economic growth could crimp global energy demand.

However, prices briefly edged into positive territory after the Pentagon said three US warships had been harassed over the weekend by Iranian gunboats in the Straits of Hormuz -- a crucial supply line for global energy supplies.

On Monday, New York’s main contract, light sweet crude for delivery in February, tumbled $3 to $94.91 per barrel in floor trading. The contract had struck a record high of $100.09 last Thursday.

Brent North Sea crude for February dived $2.42 to $94.37.

Last week it struck an historic peak of $98.50.

The market failed to maintain a short-lived bounce after Pentagon officials said Iranian speedboats had radioed a threat over the weekend to blow up three US ships in the Straits of Hormuz.

Except for Saudi Arabian oil exports through the kingdom’s Red Sea outlet, all crude exports from oil-rich Gulf Arab countries pass through the strait -- or about 20-25 per cent of the world’s crude.

“We did see a brief bounce (on Monday) when the Iranian news came out,”said Sucden trader Rob Montefusco.

“They were looking to bash through $100 again but there wasn’t any follow-through buying.The incident came ahead of US President George W. Bush’s departure on Tuesday for the Middle East region, intended to boost the Israeli-Palestinian peace process while reiterating to allies that Washington continues to view oil producer Iran as a threat.

“We’ve seen a bit of profit-taking coming in -- there are a few economic worries in the market at the moment so prices are down for now,” Montefusco said.

Before the weekend, the US Labor Department reported that the US economy gained 18,000 nonfarm jobs in December, the slowest job creation since 2003.

The unemployment rate rose to 5.0 per cent, the highest in more than two years.

“The economic outlook and impact that may have on oil demand continues to weigh on the market so some market participants saw that as a chance to take their profits,” noted Societe Generale analyst Mike Wittner.

Traders predict cautious trade ahead of the next OPEC meeting on February 1.

Outgoing Opec president, the United Arab Emirates said Monday that the recent rise in prices to $100 had nothing to do with market fundamentals, the WAM state news agency reported.

Analysts have noted that a combination of declining inventories, a weak dollar, soaring oil demand from Asia and geopolitical risks helped to propel crude prices to $100. —AFP