Oil prices reduce due to profit taking
Oil prices closed lower Monday as traders locked in profits after a brief bounce on the back of robust Chinese economic data.
In London, Brent North Sea crude for February delivery dropped USD 0.40 to settle at USD 80.97.
New York’s main futures contract, light sweet crude for February delivery, ended at USD 82.52 a barrel, down USD 0.23 from its close Friday.
The New York market began the session on an upbeat note, lifted by news Sunday that China, the world’s second-largest energy consumer, saw exports surge 17.7% in December, after 13 months of declines.
The jump in exports renewed market hopes that a sustainable global recovery is underway, led by China’s huge economy.
Amrita Sen, a Barclays Capital analyst, noted that Chinese oil imports rose to a record five million barrels a day in December, a 48% jump from a year ago.
“We expect Chinese oil demand to continue to grow robustly and to remain the single largest contributor to global oil demand growth in 2010,” Sen said.
The New York contract hit an intraday peak of USD 83.95 a barrel, its highest level since October 9, 2008, before slipping into the red in morning trade and remaining there for the rest of the session.
“People used those higher prices as a point to take some profit,” said Jason Schenker of Prestige Economics.
“What people have forgotten is that the price was below USD 70 less than a month ago. The only reason it’s really gone up is because of a large number of consecutive inventories draws in the US,” he said.
The US drawdowns in distillates, which include heating oil, is linked to the bitter cold winter weather gripping the northern hemisphere from North America to Europe and Asia.
On the geopolitical front, the market kept an eye on fresh rebel unrest in Nigeria over the weekend.
The African country’s main rebel armed group in the restive oil-producing Niger Delta on Saturday said it had a hand in an attack on a Chevron crude oil pipeline which forced a shut-in of 20,000 barrels a day.
“This attack was sanctioned by MEND but did not involve our fighters,” the leading militant group, the Movement for the Emancipation of the Niger Delta said in a statement.
The attack on Friday took place at Makaraba about 100 kilometers (60 miles) southwest of Warri, one of the main cities of Delta State.
“This is the first successful sabotage since a militant ceasefire last summer. There were reports of shots fired as early as this morning,” said Phil Flynn of PFG Best.
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