VIENNA, Austria &
The price for a barrel of oil fell nearly $5 today, a two-day swing of more than $8 as traders took profits and fears of a supply disruptions eased.
But analysts warned the pullback could be fleeting.
"The plunge is really a temporary bull correction and is viewed by the market as a buying opportunity," said Victor Shum, an analyst with Purvin Gertz in Singapore. "We are also seeing the U.S. dollar easing a bit ... and that has helped support oil pricing."
Trader and analyst Stephen Schork said the expectation just a few days ago that crude prices would touch $150 this week now "does not look like the proverbial done deal."
"Be that as it may, we have seen this movie before, i.e. crude oil weakens a little and the bubble-bears jump in," he added in his Schork report, suggesting the price respite might be temporary.
Sweet crude for August delivery fell $4.63 to $136.74 a barrel in electronic trade on the New York Mercantile Exchange. On Monday, the contract fell $3.92, or about 2.7 percent, to settle at $141.37 in New York.
Oil hit a trading record of $145.85 on Thursday before settling at a record close of $145.29 a barrel. There was no floor trade in the U.S. on Friday due to the July Fourth holiday.
August Brent crude also lost heavily, dropping by $4.63 to $137.24 barrel on the ICE Futures exchange in London
Concern over the unruly oil market was a top priority today at a summit of industrialized powers in Rusutsu, Japan with leaders calling on petroleum suppliers to boost production and refining and to increase investment in oil exploration and output over the medium term.
The G-8 &
which groups the U.S., Britain, Japan, France, Germany, Canada, Russia and Italy &
also called for diversifying sources of energy and further efforts to improve energy efficiency.
"We remain positive about the long-term resilience of our economies and future global growth," the communique said, noting that growth in emerging economies remained strong. "However, the world economy is now facing uncertainty and downside risks persist."
The U.S. dollar was stronger against most other major currencies in European trading Tuesday morning and remained firm against the euro by the afternoon although it lost ground against the Japanese yen and the Swiss franc.
A falling dollar has helped boost oil prices around 50 percent this year, with investors often buying commodities such as oil as a hedge against inflation when the greenback weakens.
Along with some signs of life from the dollar, fears that fresh conflict in the Middle East could cut oil supplies eased over the weekend after Iran gave an undisclosed response to an international offer of incentives if it suspends a central part of its nuclear program.
But Shum said the conflict isn't over.
President Mahmoud Ahmadinejad has insisted Iran would not bow to pressure to halt uranium enrichment, even though Tehran indicated willingness to open talks. World powers fear that Iran could use the uranium to build nuclear weapons.
"There are mixed signals and the Iran situation has certainly not been resolved," Shum said.
Ahmadinejad told Malaysian media during a visit to Kuala Lumpur on Monday that all nations should be able to use nuclear energy without any restrictions, stressing that it would provide them with a cheap alternative to crude oil.
Iranian state media reported that the European Union policy chief Javier Solana and Iran's top nuclear negotiator Saeed Jalili would hold talks in the second half of July.
In Asian currency trade, the dollar was weaker against the euro and yen compared with values seen Monday in New York. The euro was holding at $1.5736, while the dollar was buying about 106.40 yen.
In other Nymex trade, heating oil and gasoline futures fell by about 6 cents to $3.91 a gallon (3.8 liters) and $3.4224 a gallon. Natural gas futures dipped more than 33 cents to fetch $12.644 per 1,000 cubic feet.
Oil prices drop more than $8 in 2 days
VIENNA, Austria &