LONDON (AFP) – Oil prices dropped to near 68 dollars on Monday as traders took profits following recent gains, analysts said.
New York’s main futures contract, light sweet crude for delivery in July, slid 1.53 dollars to 68.02 dollars a barrel. The contract expires later Monday.
Brent North Sea crude for August fell 1.04 dollars to 68.15 dollars.
Oil prices were due for a correction after breaching the 72-dollar mark last week on concerns they were rising far ahead of a recovery in the ailing global economy, said Victor Shum, an analyst with energy consultancy Purvin and Getz.
“A price correction in oil is long overdue and the US dollar stabilisation (will) continue to put pressure on oil,” said Shum.
The dollar traded in a tight range on Monday ahead of a US Federal Reserve monetary policy meeting this week, dealers said.
A stronger US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, which in turn tends to dampen demand and pull the market lower.
Shum also said concerns over the pace and strength of a global economic recovery helped crimp the market.
“The rally in the global equities markets is possibly also stalling a bit and if the rally … is running out of steam, it will also put pressure on oil,” he added.
Oil prices plunged from record highs of more than 147 dollars in July 2008 to around 32 dollars in December as the economic slowdown crushed demand for energy but they have slowly clawed their way back since then.