LONDON, Aug 6: Oil prices dipped slightly on Wednesday after reaching highs not seen since the run-up to the Iraq war earlier in the day, as traders sold off positions despite a further drop in US gasoline stocks.

The price of benchmark Brent North Sea crude oil for September delivery fell by 20 cents per barrel to $29.73.

New York’s reference light sweet crude September contract showed a drop of five cents to $32.17 per barrel in early trading.

These figures were in stark contrast to earlier, when prices hit their highest since mid-March, as traders fretted about dwindling gasoline inventories and supply problems from Iraq and other producers.

The gains were wiped out even after figures from the US Department of Energy (DoE) showing that gasoline stocks had dropped a further 2.7 million barrels to 201.8 million barrels in the week ending on August 1 against the previous week.

Inventories were 5.9 per cent lower than the same period of 2002, and “are now well below the normal range for this time of year,” the DoE said.

The reason for the price dip was complex, traders said.

“The basic numbers don’t look too negative (for prices), but you start to look at the geographical breakdown of the builds and draws, they are possibly a little more negative,” said Prudential Bache broker Tony Machacek.

Most of the reduction in gasoline stocks came from the US West Coast, which had little impact on oil futures in New York, he said.

“As a lot of the draw down was actually in California, that’s irrelevant to what I am trading on the East Coast.”

He added: “The other thing is that the market is generally somewhat overbought at the moment, there is quite a lot of speculative length and this rather sharp move is just flushing some of that speculative length out of the market.”

Earlier in the day traders had worried about the inventory figures as well as the slow return of Iraqi crude to world markets and further possible disruption to production in Nigeria and Venezuela because of social unrest.—AFP