Crude oil prices fell yesterday, bringing falls since last Thursday to about 8 per cent, as hedge funds have reduced their exposure to crude futures following a sharp jump in prices since OPEC announced production cuts on September 24th.

IPE Brent for December delivery was 30 cents lower at $28.76 a barrel in late London trading, extending Friday's 97 cent slide but off its intra-day low of $28.05. The November Nymex WTI contract was 23 cents lower at $30.50 a barrel in early afternoon New York trading, but off its low for the day of $29.72 a barrel.

Crude futures rose more than 20 per cent to the peaks of last week following OPEC's surprise announcement, a move investors now say was too far and too fast.

The three-week ascent in oil prices ran into resistance on Thursday last week when US crude inventories were shown to have risen by a larger than expected amount.

This in turn eased fears about the relatively low level of crude inventories.

Oil traders said the sharp fall in crude futures over the past two days had reflected hedge-fund selling. "Funds are now selling after a period of short covering following the OPEC cut, which caught everyone off guard," said one London-based oil trader.

"Funds are now trying to consolidate, but I think we are likely to trend lower over the coming days, unless there is some surprise on the supply side," he said.

The Commodity Futures Trading Commission, the industry regulator, showed total speculative positions in Nymex crude futures had switched from a small net short position, which usually indicates that prices are expected to fall, to a sizeable net long position, an indication that investors expect prices to rise.