Oil prices fell 3% after setting record highs above $55 a barrel today as dealers took profits on signs that energy costs are hitting economic growth.
US light crude slid $1.73 or 3% to $53.20 a barrel after hitting a new $55.33 peak. Brent crude in London fell $1.46 to $48.86 a barrel.
Dealers said evidence was growing that rising fuel costs are beginning to slow the economic growth that helped ignite this year's $20-a-barrel price jump.
Last week's dip on the US stock market and a slump in the value of copper suggested the impact of rising energy costs was now being felt across asset classes, making an oil price reversal more likely as fuel demand growth slows.
US Federal Reserve Chairman Alan Greenspan on Friday said increased oil prices already had made a 'noteable' impact on US gross domestic product.
'So far this year, the rise in the value of imported oil - essentially a tax on US residents - has amounted to about 0.75% of GDP,' said Greenspan. 'The risk of more serious negative consequences would intensify if oil prices were to move materially higher,' he said.
Oil's latest step higher above $55 had lifted prices more than $11 since mid-September, gains that some dealers said were not sustainable.
Worries about winter inventories are unlikely to disappear any time soon. US Gulf oil production is still running low after pipeline and platform damage from September's Hurricane Ivan. Gulf of Mexico output is operating at 73% of its normal rate of 1.7 million barrels per day and some fields are expected to remain shut beyond the end of the year, the US government's resource agency said.
The shortfall has limited refiners' ability to build up US heating oil stocks, which at 50 million barrels are 10% below last year, weekly government data showed last week.
Heating oil supplies in the US Central Atlantic region, a major distribution point for the heavy consuming US Northeast, are running well below average.
The shortage is also seen in other major regions, with consumers in Germany, Europe's biggest market, keeping supplies of heating oil well below last year due to high prices. Kerosene supplies in Japan, the world's third-biggest energy user, are more than 15% below last year.
