LONDON, 8 July 2005 — World oil prices tumbled yesterday on profit-taking as deadly explosions rocked London and after a mixed report on US crude inventories, erasing fresh record high points above $62 per barrel.

New York’s main contract, light sweet crude for delivery in August, dived by as much as $4.08 to as low as $57.20 per barrel yesterday. This was shortly after the contract had hit a record $62.10 - the highest level since it was first traded in 1983 - as tropical storms threatened to bear down on US oil production facilities in the Gulf of Mexico, analysts said. The contract stood at $59.90, a fall of 1.38 dollars since Wednesday’s close, at about 1645 GMT.

In London, the price of Brent North Sea crude oil for delivery in August shed as much as $4.30 to $55.55 per barrel yesterday. Earlier, the contract hit a fresh historic peak of $60.70. Brent stood at $58.14 at about 1645 GMT, a drop of 1.71 dollars since Wednesday.

“Crude oil prices are trading in exceptionally volatile fashion as the market absorbs reports of explosions in many parts of London,” Barclays Capital analyst Kevin Norrish said.

Traders digested also the latest snapshot of US energy stockpiles, which showed crude oil and petrol inventories fell in the past week while stocks of distillates, including heating oil, staged a surprise rebound.

The Department of Energy said US crude oil stocks fell by 3.6 million barrels in the week to July 1 to 324.9 million barrels, but remained above seasonal norms. Analysts were expecting a fall of 1.2 million barrels. The DoE said petrol (gasoline) stocks were down 900,000 barrels at 215.3 million barrels, but reported that distillate products rose four million barrels to 117.2 million.

“The distillate stock rise was quite a surprise, and it clearly explains the reason for crude stocks having fallen,” Fimat analyst Mike Fitzpatrick said. “The very high distillate stock rise also removes some of the fears about shortages in jet fuel, diesel and heating oil in the latter part of the year,” he said.

Supply tensions had earlier pushed oil prices to new heights, as tropical storms threatened to bear down on US oil production facilities in the Gulf of Mexico, analysts said. Oil prices had shot up “as tropical storms in the Gulf of Mexico and the Caribbean stoked oil supply concerns,” analysts at the Sucden brokerage said.