Oil prices diverge after highsComment on this story
London - Oil prices fell in London on Monday as dealers took profits from recent gains, but the market rebounded in New York as the euro strengthened against the dollar after supportive comments from the Bundesbank.
Brent North Sea crude for delivery in March fell 42 cents to $118.48 per barrel in London late afternoon deals.
The contract on Friday scaled a nine-month peak at $119.17 a barrel on healthy economic data - and owing to geopolitical concerns after crude producer Iran rejected a US offer on nuclear talks, traders said.
Meanwhile on Monday, New York's main contract, light sweet crude for March or West Texas Intermediate (WTI), rebounded by $1.02 to $96.74 a barrel, clawing back earlier losses.
“With the Lunar New Year holidays across many Asian countries, traders found an excuse this morning to book profit on their long crude positions they had opened in recent weeks,” said GFT Markets analyst Fawad Razaqzada.
“But in the afternoon, WTI recovered as the buyers emerged around the $95 support level.
“This (was) preceded (by) a sharp rally in the euro/dollar after the Bundesbank President Jens Weidmann warned policy makers against trying to weaken the single currency.
“The rallying euro undermined the US dollar and underpinned most buck-denominated assets, including oil.”
The weaker greenback makes dollar-priced crude cheaper for buyers using stronger currencies. In turn, that tends to stimulate oil demand and prices.
Meanwhile, analysts said optimism over stronger energy demand sparked by robust US and Chinese trade data should keep prices supported.
“Positive trade data out of the world's two largest economies sent traders into the Chinese New Year holidays in an upbeat mood,” said IG trading group analyst Jason Hughes.
The US Commerce Department reported last Friday that the trade deficit shrank more than expected in December to $38.5-billion, its lowest level since January 2010, from a revised $48.6-billion in November.
Hughes said China, the world's second biggest economy and largest energy consumer, also “starts the new year full of beans as better than expected economic news continues to be released”.
China's exports jumped 25 percent year-on-year in January while imports soared nearly 29 percent. - Sapa-AFP