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London: Oil tumbled by more than $9 to near $136 a barrel on Tuesday in volatile trading on profit-taking driven by technical factors and as fears receded that a strike by Brazilian oil workers would hit supplies.
"This is largely profit-taking run amuck. There is no real hard news that you can tie this to. We have seen fundamentals weakening progressively month after month and the fall in the stock market calls our attention to that," said Tim Evans of Citi Futures Perspective.
US crude at one point fell by an unprecedented $9.26 a barrel - the biggest percentage drop since December 2004 - and by 1550 GMT, it was $5.90 down at $139.28 a barrel. London Brent crude fell $5.10 to $138.82.
Brazilian oil giant Petrobras said its output was back at full capacity and would remain so until the end of the five-day strike that started at midnight on Sunday.
"The news that Brazil's oil production is back at capacity despite a strike is negative for oil prices as crude earlier rallied on prospect of lower output from there," said Phil Flynn, analyst at Alaron Trading.
Also weighing on prices was the cut in Opec's forecast for global oil demand growth in 2008 for a fourth time this year.
The 13-member oil exporters' group, source of two in every five barrels of oil, said consumption would slow in 2009, signalling a more comfortable supply and demand balance.
Crude has risen from $20 a barrel in January 2002 to a peak of $147.27 last week on growing demand from nations like China and rising cash inflows into commodities from investors seeking to hedge against inflation and the weak dollar.
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