Oil has dipped $3,47, or 3,2%, to $106,45 per barrel today on the New York Mercantile Exchange while Brent crude oil dropped $1,90 to $122,08 a barrel.

That's after Goldman Sachs warned investors that crude is due for a "substantial pullback".

Goldman analyst David Greely said that global supplies remain "adequate" even though the rebellion in Libya shut down production there.

Meanwhile world stocks are down sharply this afternoon after Japan said its nuclear crisis is as severe as the 1986 Chernobyl disaster.

Tokyo has raised the Fukushima Dai-ichi nuclear plant incident by two notches to level 7, the highest on the scale and the same rating as the Chernobyl incident.

The International Monetary Fund has also downgraded its 2011 growth forecast for the US, Japan and Britain because of higher oil prices.

The FTSE 100 was down 1,1% at 5988 while Germany's DAX fell 1,2% to 7118.

The CAC-40 in France was 1,3% lower at 3987.

The Dow Jones industrial average is down 0,6% at 12303 soon after the open while the broader Standard & Poor's 500 index fell a similar amount to 1316.

The dollar is weakening against the euro, after figures showed a smaller than anticipated narrowing in the US trade deficit, to $45,8bn in February from the previous month's $47bn.

The markets had been looking for a figure around $44bn.

By mid-afternoon London time, the euro was up 0,4% on the day at $1,4485, having earlier hit its highest level since January last year of $1,4519. The euro has been gaining ground in recent weeks largely on the back of expectations of higher interest rates from the European Central Bank despite Europe's debt crisis, which last week saw Portugal become the third euro country to request financial help.

Elsewhere, Hong Kong's Hang Seng index fell 1,4% and Australia's S&P/ASX 200 slipped 1,5%.

With Reuters, I-Net Bridge, SAPA-AFP, SAPA-AP