SINGAPORE: Oil was down in Asian trade on Wednesday as investors moved in to take profits following a rally that took the commodity to two-year highs.
New York's main contract, light sweet crude for February delivery, dipped 15 cents to 89.23 dollars per barrel and Brent North Sea crude for February was down 23 cents at 93.30 dollars.
Oil prices were also hampered by a late rebound in the US dollar, which makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that tends to dent demand.
But the decline is forecast to be limited as demand is seen picking up due to growing optimism for the global economy, especially the US, the world's biggest oil consumer.
"The industry fundamentals supporting (oil demand) growth are not changing," said John Vautrain, vice president for Purvin and Gertz international energy consultants in Singapore.
"I continue to be optimistic about the oil prices for 2011," he said.
US manufacturing activity grew for the 17th straight month in December, bolstering confidence that the economic recovery there was gaining momentum while construction spending rose 0.4 percent in November to its highest point in five months.
But the International Energy Agency in comments published Wednesday warned oil prices were in danger of threatening the fragile economic recovery in developed nations this year.
"Oil prices are entering a dangerous zone for the global economy," IEA chief economist Fatih Birol was cited as saying in the Financial Times newspaper.
"The oil import bills are becoming a threat to the economic recovery. This is a wake-up call to the oil consuming countries and to the oil producers."
As crude prices edge towards 100 dollars, Birol's comments are likely to heap pressure on oil cartel OPEC, which last month decided to leave production quotas unchanged despite the rising cost of the commodity.
Investors are looking ahead to this week's snapshot of US energy inventories and economic data, as well as a raft of key European data.
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