Oil retreats, giving up nearly US$4 a barrel

Source: Agencies  |   2008-7-8  |     ONLINE EDITION

OIL prices tumbled nearly US$4 a barrel yesterday, erasing many of last week's record gains in a single session as concerns about potential supply disruptions eased.

Light, sweet crude for August delivery fell US$3.92, or about 2.7 percent, to settle at US$141.37 on the New York Mercantile Exchange. Earlier, the contract sank as low as US$139.50, or US$5.79 below Thursday's settlement price. In London, August Brent crude fell US$2.55 to settle at US$141.87 a barrel on the ICE Futures exchange.

Traders drove prices sharply higher at the end of last week as they bet that conflict with Iran or some other event could cut supplies, and they didn't want to get caught unprepared over the long Independence Day weekend, analysts said. There was no floor trade Friday in the U.S. because of the July Fourth holiday.

As concerns about supply disruptions subsided, many traders on Monday sold off contracts they had bought as insurance last week.

"We got through the holiday without any major news," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "No news is good news, or in this case, no news is bearish news."

After the last few weeks' run-up, however, analysts were skeptical that the drop signaled the start of a long-term decline. Prices set records in each of the previous six sessions.

"We're just moving into a new and higher trading range" of about US$140 to US$146 a barrel, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois. "We'll probably consolidate there for a week or two ... then probably push back into new record territory."

In the US, the world's biggest energy consumer. record retail fuel prices edged even higher as Americans made their way home at the end of the long weekend, typically one of the busiest driving periods of the year.