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Business News/ Opinion / Online-views/  Oil eases below $123 after first-quarter rally
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Oil eases below $123 after first-quarter rally

Oil eases below $123 after first-quarter rally

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London: Oil slipped below $123 a barrel on Monday, pulling back after a 14% rally in the first quarter, although signs of an improving economy in China and actual and threatened supply disruptions limited the decline.

China’s official Purchasing Managers’ Index (PMI) hit an 11-month high in March. Some analysts said, however, the figure was not as impressive as it looked after accounting for seasonal changes.

Brent crude slipped 33 cents to $122.55 a barrel by 0949 GMT. It ended the first quarter up 14.3 percent, its biggest quarterly rise since the first quarter of 2011. US crude fell by 50 cents to $102.52.

“We had some slightly positive Chinese data. The market is drifting in this broad sideways range, but Iran will keep it above $120," said Christopher Bellew, a broker at Jefferies Bache in London.

Brent has fallen from its 2012 high of $128.40 reached on 1 March and analysts said there were signs of waning investor enthusiasm. The US Commodity Futures Trading Commission said on Friday speculators trimmed net long US crude and options positions in the week to 27 March.

“Financial investors, who were one of the driving factors behind the rise in oil prices in the first two months of this year, would appear to (be) becoming more sceptical," said analysts at Commerzbank in a report.

Following the Chinese PMI figures, investors will be keeping an eye on US manufacturing data, the ISM index, for signs of economic health in the world’s biggest oil user.

Oil was supported by the prospect of supply disruptions. US President Barack Obama said on Friday there was enough oil in the market to allow countries to cut imports from Iran, Opec’s second-largest producer.

In his decision, Obama said increased production by some countries as well as “the existence of strategic reserves" helped him come to the conclusion that sanctions can advance.

Iran and six world powers will meet in Turkey on April 13-14 for a round of talks over Tehran’s disputed nuclear programme, US Secretary of State Hillary Clinton said on Saturday.

While threats to Iranian supply are the main worry for oil markets, actual supply has been cut in Syria, Yemen and South Sudan. On Sunday, Sudan and South Sudan accused each other of launching attacks in the oil-producing area straddling their border.

Top global exporter Saudi Arabia is pumping almost 10 million barrels per day, the highest in decades, and insists there is no shortage of supply. Opec production overall is at the highest since 2008, according to a Reuters survey.

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Published: 02 Apr 2012, 04:11 PM IST
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