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Oil slips after hitting record above $90

The jump in oil prices has been fuelled by unprecedented weakness in the dollar, which hit a record low against the euro on Friday, a factor that has supported all dollar-denominated commodities.

US crude fell 96 cents to $88.51 a barrel by 1357 GMT, having hit an all-time high of $90.07 earlier. London Brent crude dropped $1.06 to $83.54.

“It is a long overdue correction, having reached $90,” Christopher Bellew of Bache Financial said of the dip in prices.

Oil has averaged just over $67 a barrel this year and is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.

Besides the weak dollar, concern that supply may be stretched in winter, when fuel demand peaks, lent support to prices.

“The dollar weakened further, spurring some investment into oil as a hedge against dollar weakness,” said David Moore, commodity strategist from the Commonwealth Bank of Australia.

“And there are still concerns that oil market conditions will remain tight over the northern winter.”

The price run-up has concerned OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on Nov. 1.

Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 percent below a year ago, while gasoline and distillate stocks are about 7 percent below last year.

Rising political tension between Turkey and Kurdish rebels in northern Iraq has also spurred gains, as traders worry about a disruption in flows of Iraq’s northern oil exports.