Oil eased towards $125 a barrel today, as a stronger dollar and profit-taking put the brakes on a rally that took it to record peaks last week.
US light crude for June delivery fell 77 cents to $125.19 a barrel by 12.49pm, off Friday's new record high of $126.27 hit on supply concerns and a rush of speculator buying. London Brent crude fell 77 cents to $124.63.
Crude oil speculators on the New York Mercantile Exchange increased net long positions in crude oil to 63,218 in the week to May 6th, up from 53,311 in preceding week, data from the Commodity Futures Trading Commission showed on Friday.
The dollar rose today, closing in on a two-month high against a basket of currencies as a slight rise in risk appetite and growing speculation that cuts to US interest rates may soon end boosted the currency.
Oil has jumped about 13 per cent since slipping to $110.53 a barrel on May 1st, as investors seized on supply disruptions in the North Sea and Nigeria, and galloping demand for distillate fuels, notably diesel.
ICE Gas oil futures fell more than $8 today on the expiry of the prompt contract, after rising to near last week's record high of $1,210 a tonne in early trading.
Some analysts have attributed the gains in oil to a wave of fund money pouring into commodities, given the weaknesses in other financial markets.
Oil's runaway gains prompted talk last week OPEC could consider boosting output before its next scheduled meeting in September should crude oil prices keep rising.
But oil ministers from Ecuador, Qatar, UAE and an Iranian oil official said there were no plans for an early meeting as soaring prices were out of OPEC's control.
Data released by China today showed that crude oil imports fell 3.9 per cent in April from a year earlier, the first decline in 18 months, after refiners slashed purchases from March's record high and stepped up refined fuel imports.