Oil prices drop on profit-taking after strong run

NEW YORK Mon Feb 4, 2013 10:47pm IST

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El Ghany/Files

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012.

Credit: Reuters/Mohamed Abd El Ghany/Files

Related Topics

NEW YORK (Reuters) - Brent crude oil future prices dropped in tandem with equities on Monday as traders locked in profits after three weeks of gains that added around 10 percent to oil prices since the beginning of December.

The selling came across markets, as the S&P 500 and other major stock indices traded lower.

Analysts said Iran's offer of fresh talks with the West over its nuclear program also depressed the market.

"The stronger dollar put some pressure on, and over the weekend the geopolitical risk may have gone down a bit, at least the rhetoric," said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. crude oil futures remain under pressure due to operating restrictions on the Seaway pipeline in Texas, which traders fear will keep a glut of oil near the delivery point for West Texas Intermediate futures from draining.

Brent fell $1.22 to a low of $115.54 per barrel before recovering slightly to $116.00 by 11:00 a.m. EST (1600 GMT), not far off a 4-1/2 month high of $117.07 reached on Friday. Brent had risen for three straight weeks.

U.S. crude dropped $1.70 to a low of $96.07 per barrel, after rising for eight consecutive weeks, the longest such winning streak since July-August 2004. It was at $96.65 by 11:00 a.m. EST (1600 GMT).

The global economic picture brightened last week, as U.S. nonfarm payrolls rose by 157,000 in January, while the Institute for Supply Management said its index of national factory activity reached its highest level since April.

Other purchasing manager surveys showed Chinese factories remaining on track for a mild recovery, while the euro zone manufacturing sector had its best month in a year despite a contraction.

Still, U.S. Commerce Department data on Monday showed a drop in U.S. business investment plans in December.

"A downward correction in the S&P 500 following factory data that was weaker than expected and a firmer US dollar prompted some profit taking in global crude oil contracts," Timothy Evans, energy analyst for Citi Futures Perspective, wrote in a note to clients.

Evans went on to say that a steady performance by the heating oil futures suggested more of a high level rotation between markets than a full downward reversal.

Meanwhile, supply concerns due to conflict in the Middle East eased with the Iranian announcement.

Facing stiff sanctions from the United States and Europe over its nuclear program, Iran said on Sunday six world powers had suggested a new round of nuclear negotiations this month, but it did not commit itself to either proposal.

However, tensions remained high on Monday as Iran told Israel it would regret its air strike against Syria last week, without spelling out whether Iran or its ally planned any military response.

(Additional reporting by Robert Gibbons in New York, Christopher Johnson in London and Ramya Venugopal in Singapore; Editing by Alden Bentley)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage