Oil prices drop to US$108.56 a barrel as investors cash in on seven-day surge

NEW YORK, N.Y. – Oil prices fell Monday as investors booked some profits after a seven-day surge. Prices were also under pressure from concerns about the global economic recovery and a stronger U.S. dollar.

Benchmark West Texas Intermediate crude fell by $1.21 to end the day at US$108.56 a barrel in New York. Brent crude, which is used to price oil imported by U.S. refineries, lost $1.30 to finish at US$124.17 a barrel in London.

Analysts say a standoff between the West and Iran over its nuclear program continues to keep oil prices around nine-month highs. But some traders sold contracts to lock in profits following a nine per cent rise since mid-February.

“Some people are getting out now just because oil is at those high levels,” PFGBest analyst Phil Flynn said.

A number of western countries say they fear that Iran is building a nuclear weapon and have been trying to get international inspectors into its facilities. Iran denies that allegation and has threatened to disrupt oil supplies in response to any threats against it.

The U.S. dollar rose against the euro after finance ministers from the world’s 20 leading economies said they would not contribute more money to the International Monetary Fund, much of which would be used to protect against eurozone debt default, until the European Union puts up more money to stave off its debt crisis.

The euro fell to US$1.3398 in afternoon trading Monday from $1.3459 late Friday. The euro rose to an 11-week high of $1.3486 on Friday.

In other energy trading, heating oil fell by three cents to finish at US$3.29 a U.S. gallon (3.79 litres) and gasoline futures lost two cents to end at US$3.13 a gallon. Natural gas futures fell by 10 cents to finish at US$2.45 per 1,000 cubic feet.