LONDON (Dow Jones)–Oil prices traded lower Tuesday as some investors took profits from a 2% surge in prices the previous day and others stayed on the sidelines ahead of data releases from the U.S. due later in the day.
At 1053 GMT, the May Brent contract on London’s ICE futures exchange was down 76 cents, or 0.6%, at $124.68 a barrel. The May contract on theNew York Mercantile Exchange was trading down 78 cents, or 0.7%, at $104.45 a barrel.
U.S. oil demand in January fell by 4.5% from a year before to 18.268 million barrels a day, according to government data released Monday.
Olivier Jakob, managing director at Swiss-consultancy Petromatrix, said that aside from profit-taking after Monday’s gains, contracts across both sides of the Atlantic were trading lower because of fears that oil demand won’t be able to hold up at current price levels. These fears are compounded by warnings from the International Energy Agency that high oil prices are a threat to economic recovery, he said.
Trading may be limited ahead of a key meeting next week between Western powers and Iran on its disputed nuclear program and with a short working week due to the long Easter weekend starting Friday, analysts said.
Despite the slip in prices Tuesday, there is a chance they could rise as the potential for a quick return of oil exports from South Sudan is looking less likely. Fighting between Sudan and South Sudan on their border has raised serious doubts about the two neighbors’ ability to find a speedy resolution to a dispute that has led South Sudan to shut in roughly 350,000 barrels a day of oil production.
Later Tuesday, market participants will look to a report on U.S. factory orders and the minutes of the Federal Reserve’s Open Market Committee meeting for cues on market direction. Investors will also look to weekly data due from the American Petroleum Institute on crude oil inventories from last week.
At 1057 GMT, the ICE’s gasoil contract for April delivery was up $3.00, or 0.3%, at $1,027.50 per metric ton, while Nymex gasoline for May delivery was down 111 points, or 0.3%, at $3.3711 per gallon.
-By Jenny Gross, Dow Jones Newswires