Oil fell during this week, taking a dive on Friday amid concerns that China will implement further monetary policy tightening measures after raising the reserve requirement for banks by 50 basis points.
Oil prices declined at the start of the week as the US dollar surged against the euro amid rising concerns over Europe’s debt problems.
Europe’s single currency rebounded after Ireland’s government unveiled the toughest budget in the country’s history, aimed at reducing its massive sovereign debt.
The prices were supported by US President Barack Obama’s decision to extend tax breaks introduced by his predecessor George W Bush.
Crude oil futures then fell on profit taking before rebounding after EU finance ministers decided not to provide immediate rescue package to Spain and Portugal and not to extend Europe's rescue fund.
Investors got mixed signals about the strength of energy demand in the US from this week’s inventories reports.
The US Department of Energy said that crude oil stockpiles shed 3.8 million barrels, however, gasoline inventories increased by 3.8 million barrels.
In other news, energy consultancy Wood Mackenzie said this week that global oil demand reached the highest level ever at 88.3 million barrels per day in the third quarter of 2010, mostly due to a surge in demand from emerging economies such as China and India.
The Organization of Petroleum Exporting Countries’ (OPEC) current president Wilson Pastor-Morris said that the current prices of over US$90/barrel were comfortable for both producers and consumers.
US light, sweet crude for January delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell to US$87.79/barrel, while February crude declined to US$88.31/barrel.
On the ICE Exchange, January Brent Crude last traded at US$90.53/barrel. Brent for February delivery stood at US$90.73/barrel.
Oil and gas stocks were in demand this week.
BP (LON:BP) climbed to 455 pence, while fellow supermajor Shell (LON:RDSB) advanced from 2,000 pence to 2,034 pence.
BG Group (LON:BG) rallied from 1,234 pence to 1,303 pence, while Tullow Oil (LON:TLW) surged from 1,178 pence to 1,232 pence and Cairn Energy (LON:CNE) rose from 397 pence to 411 pence.
Oil and gas engineering firms were in decline as Amec (LON:AMEC) declined from 1,222 pence to 1,115 pence and Petrofac (LON:PFC) fell from 1,500 pence to 1,443 pence.