Oil Drops From Two-Year High as Investors Sell After Prices Soar

Oil dropped from a two-year high in New York as signs of slowing economic growth in China prompted traders to sell contracts after the biggest two-day rally since May. Brent crude traded above $100 a barrel for a second day.

Oil rose 7.7 percent in the two days through yesterday as civil unrest in Egypt raised concern supplies through the Suez Canal may be disrupted. Futures pared some of those gains today after manufacturing growth in China, the world’s biggest energy user, slowed in January. U.S. stockpiles probably climbed for a third week, according to a Bloomberg News survey. Brent’s premium to New York crude narrowed for a third day.

“Not a lot of people are thinking that crude oil will keep this level for a long time,” said Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo. “The market was softened earlier by profit-taking.”

Crude for March delivery dropped as much as 36 cents, or 0.4 percent, to $91.83 a barrel in electronic trading on the New York Mercantile Exchange. It was at $91.94 a barrel at 10:35 a.m. in Singapore. Yesterday, prices surged to $92.19, the highest settlement since Oct. 3, 2008. Futures advanced 0.9 percent in January and 24 percent over the past year.

Brent for March settlement dropped as much as 73 cents, or 0.7 percent, to $100.28 a barrel on the ICE Futures Europe exchange in London. It traded at $101.73 yesterday on an intraday basis, the highest since Sept. 29, 2008.

China’s Purchasing Managers’ Index fell to 52.9 from 53.9 in December, the China Federation of Logistics and Purchasing said in a statement on its website. That was less than the median estimate of 53.5 in a Bloomberg News survey of 11 economists.

An Energy Department report tomorrow may show that U.S. crude oil inventories climbed by 2.5 million barrels last week from 340.6 million, according to the median of 11 analyst estimates in a Bloomberg News survey.


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http://www.bloomberg.com/news/2011-02-01/oil-drops-from-two-year-high-as-investors-sell-after-rally-on-egypt-unrest.html