PERTH,(Reuters) – Oil fell on Monday, after topping $126 a barrel last week, as the market focused on a stronger U.S. dollar and put aside supply worries for now.
U.S. light crude for June delivery CLc1 fell 54 cents to $125.42 a barrel by 0630 GMT. It struck a new record high of $126.27 on Friday, thanks to fuel supply concerns and a rush of speculator buying.
London Brent crude LCOc1 fell 77 cents.
“The dollar has strengthened so that could have pushed down oil prices. I think some people in the market are also taking profit after the strong rally last week,” said Robert Nunan, assistant manager of risk management at Mitsubishi Corp in Tokyo.
The U.S dollar climbed back towards a two-month high versus a basket of currencies on Monday as weak economic data in Australia and New Zealand showed more signs of a global slowdown, giving the battered U.S. currency a boost.
Oil has jumped about 13 percent since slipping as low as $110.53 a barrel on May 1, as investors seized on supply disruptions in the North Sea and Nigeria, as well as galloping demand for distillate fuels, a category that includes diesel fuel and heating oil.
Analysts said recent outages have highlighted the vulnerability of oil supplies from several regions and ongoing violence in the Middle East would continue to fan supply fears.
Turkey said on Sunday it had launched air and artillery attacks against Kurdish separatist rebels in northern Iraq overnight after an insurgent strike on a military base.
Over the past week dozens of Turkish F-16 warplanes have launched bombing raids against suspected PKK positions deep inside northern Iraq.
In Lebanon, Hezbollah militants continued to battle the country’s pro-government gunmen in Beirut on Sunday, extending the fighting to a fifth day in Lebanon’s worst civil strife since the 1975-1990 civil war.
Although Lebanon is not an oil producer, civil unrest there has pushed up oil prices in the past, most recently in the summer of 2006 when Israel invaded Lebanon in an unsuccessful attempt to subdue Hezbollah.
Oil’s surge on Friday came amid large gains in heating oil and gasoline. Tight supplies on both sides of the Atlantic supported gains in heating oil, while expectations of higher gasoline demand in the summer driving season drove gasoline prices to a record high on Friday.
An OPEC source said on Friday the group might consider boosting output before its next scheduled meeting in September should crude oil prices keep rising, but Ecuador’s, Qatar’s and Iran’s oil ministers said there were no plans for an early meeting as soaring prices were out of OPEC’s control.