Oil prices retreat below $80

Oil prices dipped under $80 today, extending last week's losses as traders adjusted for a strengthening US currency and a surprise Indian interest rate hike.

    
New York's main contract, light sweet crude for April delivery, shed 87 cents to $79.81 a barrel.

    
London's Brent North Sea crude for May lost 71 cents to $79.17.

    
"A firmer US dollar and a surprise-rate hike in India created the headwinds," said Commerzbank analyst Carsten Fritsch.

    
The euro slid to a three-week low against the dollar today over German resistance to a Greek financial rescue plan, traders said.

    
In morning London trade, the European single currency tumbled to $1.3496 -- the lowest level since the start of March. It later recovered to $1.3522.

    
A stronger US unit makes dollar-denominated crude more expensive for buyers using weaker currencies and therefore tends to dent oil demand and prices.

    
Meanwhile, higher interest rates in India stoked worries about energy demand from Asia. The Reserve Bank of India sprang a 25-basis-point interest rate hike before the weekend.

    
The timing of Friday's rise caught markets off guard and sparked concern that higher interest rates may damage a tentative global economic recovery.

    
Oil prices sank heavily last week as traders tracked the dollar and Greek debt concerns, and shrugged off a widely-expected decision from the Organisation of Petroleum Exporting Countries (OPEC) cartel to hold output.

    
"Crude futures suffered losses late on Friday, declining in line with the broader commodity market after yet another session of gains for the US currency," VTB Capital analyst Andrey Kryuchenkov said.

    
"Fears over the eurozone's financial troubles intensified ahead of this week's EU summit where financial aid to (Greece) ... will be discussed."

    
Meanwhile in Geneva today, leading OPEC ministers warned against financial speculation on oil markets, fuelled by the uncertain economic recovery and sudden booming demand in emerging economies.

    
The president of OPEC and ministers from Qatar and the United Arab Emirates said that they were striving for stable and optimum prices in the wake of the volatility triggered by the global financial crisis.

    
OPEC president and Ecuadoran resources minister Germanico Pinto told a UN conference in Geneva that although the oil market had moved to "more realistic and stable oil price," pressures for "extreme volatility" remained.