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:
  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

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