Oil prices retreat, but fears of rebound remain

After shooting up at blinding speed, the price of crude oil has come down even faster - plunging US$10.50 a barrel in just two days. This reversal and a quick rally late yesterday following a Nigerian pipeline explosion have got the market confused.

'It's anybody's guess where prices will head next,' one trader said, while another economist believes that this is just a temporary respite and 'not a tipping point yet'.

After hitting an all-time high of over US$147 a barrel just last Friday - and threatening to breach US$150 - crude oil had slipped to just over US$134 in Asian trade yesterday afternoon, following the slide in New York on Tuesday and Wednesday.

This meant relief for some and fresh worries for others. Singapore Airlines' stocks gained 38 cents or 2.6 per cent from the latest oil price fall to close at S$15.06. Meanwhile, the stocks of alternative energy players were hit. Biofuel/palm oil stock Wilmar fell 23 cents to S$4.31, while Straits Asia, which has coal mine assets, closed at S$2.78, down 15 cents.

In London, oil rose above US$136 a barrel yesterday as investors resumed buying after the recent sharp drop and boosted by fresh cuts to Nigerian oil output.