Oil prices slip on fresh concerns over slowing global growth

Oil prices slipped in Asian trading on Thursday amid fresh concerns of weakening global growth which would dampen energy demand, dealers said.

The firmer greenback, which makes dollar-denominated commodities like crude more expensive for foreign buyers, was also a factor behind the weaker oil prices, they said.

In morning trade, New York's main contract, light sweet crude for July delivery dropped 56 cents to 121.74 dollars a barrel from 122.30 dollars at the close of floor trading in the United States on Wednesday.

New York oil prices had shed 2.01 dollars Wednesday.

London's Brent North Sea crude for July delivery fell 45 cents to 121.65 dollars a barrel.

The OECD slashed its growth forecast for the world's industrial powers Wednesday, raising fresh worries that energy demand would weaken, dealers said.

"It is very clear that the OECD countries are going to see soft demand," said Jason Feer, vice president of energy market analysis at Argus Media Ltd.

"All that is very bearish in terms of energy demand," he said.

The Organisation for Economic Growth and Development in a twice-yearly survey said its 30 member economies were confronting "three adverse shocks" -- financial market uncertainty, a housing downturn and soaring food and energy prices.

The Paris-based think tank predicted that momentum in the industrialised world would slow to 1.8 percent this year, from 2.7 percent in 2007, and 1.7 percent in 2009.

The OECD said the US economy, the biggest energy user, was expected to remain sluggish all year, contracting in the second quarter before staging a gradual recovery in 2009.

Latest figures from the US Department of Energy showing a bigger-than-expected rise in petrol reserves was also a sign of slowing demand, dealers said.

"In the US, people are not used to gasoline being four dollars (a gallon)," said Feer.

The DoE said in its weekly report Wednesday that petrol reserves increased 2.9 million barrels in the week ending May 30 against expectations for a gain of 825,000 barrels.

Analysts said the figures pointed towards slowing demand in the world's biggest energy consuming nation as consumers recoil from high gasoline prices.