In Asian trade, the main contract for light, sweet crude oil fell 73 cents to $99.28 a barrel, after closing above $100 for the first time on Tuesday.

But the steep rise in the oil price knocked share prices, with Japan's Nikkei index closing down more than 3%.

Oil hit a record Exxon in Venezuela asset freeze ...
Brown set to oppose MP pay rise ... $100.10 a barrel on Tuesday on fears the group of Opec producing nations would cut output.

Supply worries

"It's just a bit of a correction. The market is settling down after such a massive move last night," said Peter McGuire, managing director of Commodity Warrants Australia.

After peaking at a new record of $100.10 a barrel, prices edged back to close at $100.01 on Tuesday.

Market analysts said Opec producers might cut production in response to the slowdown of the US economy, which is the world's biggest oil user.

There was also concern over supplies from Nigeria and the ongoing row between Exxon Mobil and Venezuela.

Crude oil jumped 5% to hit a record of $100.10 and closed at $100.01 on Tuesday.

Opec oil producers are due to meet next on 5 March.

Stocks rattled

Japan's Nikkei share average closed down 3.3% at 13,310.37, its lowest close since 13 February, on fears that the surge in oil prices could stoke inflation.

"The move upwards for oil prices driven by geopolitical fears may be slightly excessive but real concerns remain over the impact on corporate earnings," said Akio Yoshino, chief economist at Societe Generale Asset Management.

In Hong Kong, the main Hang Seng index was down by more than 2%.

Wall Street also closed lower although energy stocks rose on the back of higher oil prices.

The benchmark Dow Jones slipped 10.99 points, or 0.09%, to end at 12,337.22.

(BBC)

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