Oil Closes Down at $80.24 as Investors Cash In
Oil prices closed down on Monday, as investors took profit from the near-record highs of last week and weighed the threat of a deeper economic slowdown in the United States, the world's top oil consumer.
U.S. light, sweet crude fell $1.42 to end trade at $80.24 per barrel.
London Brent crude dropped $2.01 to $77.16.
"Today's drop in crude futures is a follow-through from Friday's end-of-the-quarter profit-taking," said Phil Flynn of Alaron Trading.
Oil prices have surged more than 30 percent this year, to an all-time high of $83.90 in late September, on expectations of a supply shortfall in the fourth quarter as heating demand peaks in the Northern Hemisphere.
But traders, eyeing a credit crunch in the United States and Europe that is showing signs of slowing economic growth, have pushed down the price to take profits.
A weaker dollar limited oil's losses and propped up other commodities denominated in the currency. Gold hit a 28-year high on Monday, while platinum neared a record peak.
An Iranian oil official said on Sunday the price of the benchmark U.S. crude could rise $10 from current levels by December, if the dollar continued to weaken.
"If the value of the dollar continues to drop, the price of...WTI...will reach about $90 in three months," said Hojjatollah Ghanimifard, international affairs director of the state-owned Iranian oil company.
Apart from a weak dollar, analysts said, expectations of tightening fuel supplies heading into the northern winter and the threat of supply disruptions due to hurricanes would also continue to support prices in the near term.
The Organization of the Petroleum Exporting Countries agreed last month to boost production by 500,000 barrels per day to soothe consumer concerns over high prices and tight supplies.
But oil has traded near $80 for the past three weeks and OPEC is reluctant to promise more oil just yet.
Qatar's oil minister said on Monday that speculative cash flowing into oil from other assets was driving up the price.
"Our increase in output could not overcome the investment flow switch," Abdullah al-Attiyah told Reuters. "Investors believe oil is safer than some others [assets]."