LONDON, Dec 30: Oil futures dropped back below 40 dollars a barrel on Tuesday as the market focused once more on weak energy demand after hefty price gains a day earlier amid the Israeli-Hamas conflict.

Brent North Sea crude for delivery in February fell 1.10 dollars to 39.45 dollars a barrel in afternoon trade on London’s InterContinental Exchange after spiking more than two dollars on Monday.

New York’s main contract, light sweet crude for February, shed 1.25 dollars to 38.77 dollars, having also jumped more than two dollars Monday.

Prices had been higher because of a “political risk premium” resulting from the violence in Gaza, said Jonathan Kornafel of trading group Hudson Capital Energy.

A sharp global downturn has slashed world demand, pulling prices down from record highs of above 147 dollars in July.

New York crude plunged earlier this month to below 33 dollars, its lowest point for almost five years.

Continued geopolitical tensions saw oil rocket above 120, 130 and 140 dollars on their way to setting all-time highs by mid-year.—AFP