LONDON, April 8: Oil prices dropped on profit-taking on Tuesday after trading close to record high points as the market reacted to tight supplies, traders said.

New York’s main oil contract, light sweet crude for delivery in May, touched $109.64 per barrel early on Tuesday.

The contract later stood at $108.54, down 55 cents from the close on Monday.

New York crude hit a record $111.80 on March 17 owing to a weak dollar, tightening global supplies and choppy world financial markets.

Brent North Sea crude for May dropped 60 cents to $106.54 after earlier touching $107.78. That was close to a record high $108.02 also reached in March.

Oil prices were “still supported by renewed supply concerns after a fire at a Finnish refinery,” said Sucden analyst Andrey Kryuchenkov on Tuesday.

Prices moved higher after the fire at a 200,000 barrels-per-day refinery in Porvoo, Finland, he added.

The news hit the market because traders are focused on motor fuel supplies refined from crude oil ahead of the peak demand US driving season, starting in May, when many Americans hit the roads for their holidays.

The market also found solid support after oil exporters in the Organisation of Oil Exporting Countries rejected Western calls to increase output and so ease supply pressures.

Traders are keenly awaiting Wednesday’s weekly US government report for a fresh reading on the state of US gasoline (petrol) inventories.

On Monday, prices jumped higher as investment demand was partly driven by comments from Opec, which pumps 40 per cent of world oil supplies.

Over the weekend, the Opec secretary general, Abdullah al-Badri, rejected calls for an increase in output, saying non-fundamental factors were to blame for current high prices.

“At the moment there is enough oil in the market and no need to change Opec’s output,” he said.Opec defiantly maintained output at 29.67 million barrels per day at its last meeting in March.

Kryuchenkov said on Tuesday: “The group remains (resistant) to pleas from top consuming nations, with Opec Secretary General Abdulla al-Badri reiterating the group’s view that the market is well supplied, once again blaming the weaker dollar, geopolitical tensions and lower refining capacities for driving prices higher.” —AFP