London: Oil prices fell on Tuesday on profit-taking after optimism about a potential global economic recovery had sent them spiking to the highest levels this year, traders said.
New York’s main futures contract, light sweet crude for delivery in July, fell 63 cents to $67.95 a barrel.
Brent North Sea crude for July delivery shed 51 cents to $67.46 in London approaching the half-way stage.
“It’s probably a natural sort of retreat after a very strong rally,” said Jason Feer, vice president of energy market analysts Argus Media.
“There doesn’t seem to be a very strong recovery in demand to justify such a strong increase in price,” Feer said. “There is still a vast amount of crude inventories.”
Crude prices had rebounded in recent days as positive economic data suggested that the global economy was on the mend. They also won support from a sliding dollar.
A weak US currency makes dollar-priced oil cheaper for holders of stronger currencies, in turn stimulating demand and pushing up prices.
Crude oil futures on Monday soared above $68 a barrel for the first time in seven months, in part helped by news that the manufacturing sector in China had expanded for a third month.
China is the world’s second-biggest energy consuming nation behind the United States.
Oil prices fell from a record of above $147 per barrel in July to about $32 in December as the world economic slowdown crushed demand for energy, but they have gradually recovered since the start of 2009.
The Saudi cabinet said Monday that the world’s biggest oil exporter sees $75 to $80 a barrel as a fair price for crude.
Saudi Arabia is the de facto head of the OPEC oil producers’ group that last week decided to keep output unchanged amid signs of economic recovery and higher crude prices.
OPEC, which pumps 40% of the world’s oil, believes the market is oversupplied but appears satisfied with crude prices after a rally in the last two weeks that has taken crude above $60 a barrel.
The market was meanwhile awaiting the latest weekly snapshot of energy inventories in the United States. Last week the US government reported that US.