Oil swings back towards $130

LONDON (AFP) - World oil prices rebounded towards 130 dollars per barrel on Wednesday, reversing earlier losses in volatile trade amid lingering worries about stretched global energy supplies, analysts said.

New York's main oil futures contract, light sweet crude for July delivery, gained 64 cents to 129.49 dollars after earlier sliding as low as 125.96.

Brent North Sea crude for July rallied 66 cents to 128.97 dollars, having earlier touched an intra-day low of 126.04.

"The market still remains well supported by persistent supply concerns due to rising energy demand and limited spare capacity on the supply side," said Sucden analyst Andrey Kryuchenkov.

Both contracts had hit historic peaks above 135 dollars last Thursday as speculative trade was driven by tight global supplies and a weak dollar, which makes commodities priced in the US unit cheaper for foreign buyers.

But prices tumbled by more than three dollars on Tuesday because of profit-taking and growing jitters about demand in the United States which is the world's biggest consumer of energy.

The market slid "following the release of poor (US) economic data and fears that high fuel prices may curb demand," wrote analysts at energy consultancy John Hall Associates.

"Poor economic data increases the chances of a recession, potentially curbing demand for oil related products."

However, sky-high oil prices continue to spark international concern and have prompted protests worldwide over soaring fuel and food costs.

Britain's Prime Minister Gordon Brown warned on Wednesday that the world faced a "great oil shock" that could only be addressed by urgent action on a global scale.

"The global economy is facing the third great oil shock of recent decades," Brown wrote in the The Guardian newspaper. "It is now understood that a global shock on this scale requires global solutions."

Oil prices have risen more than fourfold in the last five years, underpinned by growing demand in China and other emerging economies.

The price of oil on international markets has surged by about a third since the start of 2008 and traded at 50 dollars per barrel 18 months ago and just 10 dollars a decade ago.

The market was also supported by unrest in crude-producing countries particularly Nigeria and OPEC's reluctance to hike output.

Indonesia said Wednesday that it would withdraw from the Organisation of Petroleum Exporting Countries (OPEC) after years of declining exports.

The only Southeast Asian member of the cartel has become a net oil importer and will not bother to renew its OPEC membership at the end of this year, Energy and Mineral Resources Minister Purnomo Yusgiantoro said.

OPEC, which pumps 40 percent of the world's oil, is reluctant to bend to US-led demands for it to pump more crude to help cool prices.