- POSTED: 31 Dec 2013 05:23
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Oil prices retreated Monday on profit taking and concerns that US oil inventories will bounce back in early 2014 after recent declines.
NEW YORK: Oil prices retreated Monday on profit taking and concerns that US oil inventories will bounce back in early 2014 after recent declines.
US benchmark West Texas Intermediate (WTI) for February delivery fell US$1.03 to US$99.29 a barrel.
European benchmark Brent oil for February delivery declined 97 cents to US$111.21 a barrel in London.
WTI closed Friday above US$100 a barrel for the first time since October following strong US economic data, including a surprisingly big decline in US oil inventories.
WTI's breaching of the psychologically important US$100 level capped a comeback after oil sank to US$92.61 a barrel on November 28.
But Gene McGillian, a broker and analyst at Tradition Energy, said it still is unclear whether the recent decline in US oil stocks reflects a real increase in demand.
Refiners typically reduce crude inventories at the end of the year in order to qualify fewer assets for tax purposes.
"If this is just a withholding of inventory for tax purposes, the market is probably overdone," McGillian said. A rise in oil inventories in early 2014 could "take the wind out of the sails" of the rally, McGillian said.
"The market is seeing a little bit of profit taking," he added.
Analysts also cited comments from the Libyan national oil company that some oil operations in the country had resumed. However, Libyan oil exports remain curtailed due to a months-long blockade in the North African country.
Another drag on the oil market was the conclusion Friday of a strike at Total's five refineries in France after nearly two weeks.
Andrew Lipow, president of consultancy Lipow Oil Associates, attributed Monday's decline in gasoline and diesel prices to the end of the French strike.
"The big story is that the market is being weighed down by weakness in the petroleum products," Lipow said.
"That's a direct reflection of the French refineries returning, adding to the product supply in Europe, which consequently is impacting the markets over here."