Oil drops below $141, eyes dollar, Iran

LONDON - Oil retreated to below $141 a barrel on Monday, taking a pause from a record-breaking rally that has lifted prices by almost 50 percent this year.

By (Reuters)

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Mon 7 Jul 2008, 9:18 PM

Last updated: Sun 5 Apr 2015, 12:48 PM

Investors were eyeing mixed signals from Iran, the world's fourth-largest oil exporter, in its dispute with the West over its nuclear work, and a rise in the value of the dollar against other major currencies.

"The market had been trending sideways for a while and now there's a break downwards," said Christopher Bellew, senior oil broker at Bache Commodities.

"Once it made a break below Friday's lows, that probably sparked off a bit of technical selling."

U.S. crude traded at $140.77 a barrel by 1320 GMT, below Friday's intra-day low of $143.22. Brent crude fell $2.90 to $141.52.

The New York Mercantile Exchange did not issue an official Friday closing price due to the July 4 holiday.

On Monday, the dollar reached a one-week high against a basket of major currencies, benefiting from a European Central Bank tone that has reduced expectations of further interest rate rises.

Strength in the U.S. dollar can reduce the appeal of oil and other commodities to investors as a hedge against inflation.

Mixed signals

Oil in New York hit a record $145.85 on Thursday, but later eased as traders anticipated lessening tensions between Iran and the West after Tehran responded to a package of incentives to try to resolve the dispute.

But Iranian President Mahmoud Ahmadinejad said on Monday Iran would not abandon its right to enrich uranium and rejected a major powers' demand to do so as "illegitimate," the official IRNA news agency reported.

Tehran's foreign minister on Sunday expressed optimism about what he said was a "new environment" for talks.

Oil has gained almost 50 percent this year, driven partly by tension over Iran's nuclear programme and expectations that global supply will fail to keep pace with demand from fast growing Asian economies such as China.

The rally has led to fuel protests worldwide and begun to dampen demand in some consumer nations, including the United States, the world's biggest energy user. World leaders are concerned prices could move even higher.

Leaders of the Group of Eight nations gathering for a summit in Japan fear further oil price rises, Italian Prime Minister Silvio Berlusconi said on Monday.

"There are fears oil prices could increase further. Some people fear they could reach $200," Berlusconi told reporters on the sidelines of the summit.

More news from