UPDATE 8-Oil prices sink on profit-taking after positive streak

Tue Feb 5, 2013 2:35am IST

A statue of Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi Festival

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

* Brent, U.S. crude both correct lower from four-month highs

* Selling comes after more than three weeks of gains

* Supply worries ease slightly on Iran news (Updates with settlement prices)

By Gabriel Debenedetti

NEW YORK, Feb 4 (Reuters) - Oil future prices dropped alongside equities on Monday as traders took profits after three weeks of gains and after a rise of about 10 percent rise in oil prices since the beginning of December.

The selling came across markets as the S&P 500 and other major stock indexes 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 to a low of $115.32 per barrel before recovering slightly to settle at $115.60. 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 settled at $96.17.

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 U.S. dollar prompted some profit-taking in global crude oil contracts," Timothy Evans, energy analyst at Citi Futures Perspective, wrote in a note to clients.

Evans went on to say that a steady performance by heating oil futures early in the U.S. trading session 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 it was open to a U.S. offer of direct talks and that 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; and Peter Galloway)

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