(Updates throughout, changes dateline from LONDON)
NEW YORK, Feb 29 (Reuters) - Oil prices eased from peaks
above $103 a barrel Friday as Turkey's withdrawal of troops
from northern Iraq eased geopolitical tensions, clipping the
fund-driven rally to new inflation-adjusted highs.
U.S. crude <CLc1> fell 66 cents to $101.93 a barrel by 1728
GMT, after hitting a record $103.05 earlier in the session.
London Brent crude <LCOc1> dropped 66 cents to $100.24 a
barrel, off its record high of $101.27.
A crush of cash from investors seeking a hedge against
inflation lifted several commodities to new highs this week,
with oil eclipsing the previous inflation-adjusted high of
$102.53, which was reached in 1980 after the Iranian
revolution.
Further support came from supply distuptions, including
export delays in Ecuador and a fire at a European natural gas
terminal, before news of the Turkish withdrawal encouraged
traders to take profits.
Turkey said on Friday its troops had returned to bases
after an offensive against Kurdish rebels in northern Iraq.
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"One of the legs of this three-legged bull stool,
geopolitical, may have cooled off a bit by Turkey announcing
that it's withdrawing from its incursion into Iraq," said
Nauman Barakat of Macquarie Futures USA.
"The other two legs of this stool -- the weak U.S. dollar
and new investors flows -- remain red-hot."
Analysts say the plunging dollar, which hit an all-time low
on Friday against the euro <EUR=>, has encouraged investors to
pour money into commodities to hedge against inflation.
Markets also have rallied behind expectations the
Organization of the Petroleum Exporting Countries will not
raise output when it meets on March 5, rebuffing a call from
the United States for more supply.
"We in Iraq think that keeping the production the same as
it is and monitoring the markets is the best decision," Iraqi
Oil Minister Hussain al-Shahristani told Reuters.
"In general, all signs say that there is not a shortage in
the international crude oil market and, therefore, to ask OPEC
to increase production because of the prices now is not
justified."
ECUADOR, U.K. DISRUPTIONS
OPEC member Ecuador delayed crude exports and declared
force majeure after the Trans-Ecuadorean pipeline was punctured
by a landslide. []
Petroecuador said it had enough oil storage capacity to
maintain normal production for three days while it repairs the
pipeline, which was carrying around 150,000 barrels per day of
the oil extracted in Ecuador's Amazon forest to ports on the
Pacific Ocean.
Oil surged on Thursday after a fire at Royal Dutch Shell's
<RDSa.L> Bacton gas terminal in Norfolk, England, shut more
than 45 million cubic metres per day of gas supplies, about 13
percent of the UK national grid's forecast demand.
The Shell-operated <RDSa.L> pipeline resumed flowing gas
into the UK network at Bacton around midday on Friday, data
from National Grid <NG.L> showed. []
(Reporting by Matthew Robinson in New York; Luke Pachymuthu
in Singapore; Alex Lawler and Santosh Menon in London; Editing
by Walter Bagley)
