World oil prices dipped on Friday despite hopes of a breakthrough in the crippling budget impasse in Washington, as dealers took profits and focused on a US supply glut, analysts said.
The market also slid on receding tensions in the Middle East, but the International Energy Agency cautioned that instability in the oil-rich region remained a supportive factor.
New York's main contract, West Texas Intermediate (WTI) for delivery in November dropped $1.23 to $101.78 a barrel. Brent North Sea crude for November slid 29 cents to $111.57 per barrel in early afternoon London deals.
The market also slid on receding tensions in the Middle East, but the International Energy Agency cautioned that instability in the oil-rich region remained a supportive factor.
New York's main contract, West Texas Intermediate (WTI) for delivery in November dropped $1.23 to $101.78 a barrel. Brent North Sea crude for November slid 29 cents to $111.57 per barrel in early afternoon London deals.
Global equity markets forged higher Friday in response to a Republican proposal to offer a six-week extension of US borrowing authority, with less than a week before the government runs out of cash to pay its bills on October 17.
The White House said that President Barack Obama would be open to a short-term debt ceiling hike. But analysts said oil markets were under pressure owing to worries about supply in the United States.
"The recent EIA (Energy Information Administration) weekly report showed high WTI crude stockpiles at the Cushing trading hub," Teoh Say Hwa, head of investment at Phillip Futures in Singapore, told AFP.
The latest US data released Wednesday showed a surprising build-up of 6.8 million barrels for last week.
Teoh said the glut at Cushing, Oklahoma -- the delivery point for WTI futures -- was likely caused by a fall in utilisation levels as US refineries undergo maintenance from September to October.
Crude futures had surged on Thursday on hopes of a breakthrough deal to avert a disastrous US default, and on spiking geopolitical tensions in the Middle East.
"Both Brent and WTI managed to post significant gains during yesterday's session as investors hoped for progress in Congress regarding the debt ceiling and budget," Sucden analyst Kash Kamal said.
"Prices this morning have softened slightly as the momentum from negotiations between President Obama and the Republicans begins to fade.
"With a lack of progress as the deadline of October 17th nears, crude oil prices could see an accelerated reversal as investors take profits from the recent gains."
Oil had also advanced on Thursday as an Israeli army tweet appeared to suggest Israel had launched military action against Syria -- but actually referred to the 40th anniversary of the Yom Kippur war.
Spiking tensions in Libya provided further support. Libyan Prime Minister Ali Zeidan was freed on Thursday after being held by gunmen for several hours, in the latest sign of the country's lawlessness.
Separately on Friday, the Paris-based IEA watchdog raised its forecast for global demand this year by 90,000 barrels per day to 91.0 million barrels per day (mbd).
Demand for oil this year would rise by 1.1 percent or by 1.0 mbd from the level last year, and by 1.1 mbd in 2014 as the overall economic climate improves.
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