Oil prices fell this evening as traders took profits after a recent surge and digested a shock ratings downgrade for Japan. US crude dived $1.34 to $85.99 a barrel, after rising sharply the previous day. London Brent slipped 11 cents to $97.80.
Standard & Poor's on Thursday cut Japan's credit rating for the first time since 2002, accusing the government of lacking a 'coherent strategy' in efforts to ease the highest debt of any industrialised nation.
Oil prices had rebounded on Wednesday, following six straight drops, after the US Federal Reserve announced that it would keep interest rates low and continue bond purchases to help the economic recovery.
But the oil market hit reverse gear today as investors also reassessed data showing weak energy demand in the US. US data yesterday showed an unexpectedly sharp build in US crude inventories, indicating soft demand. US oil inventories jumped 4.8 million barrels in the week ending January 21, compared to analyst expectations for a gain of 900,000 barrels.
