UPDATE 10-Oil falls after recent surge despite supply fear

Mon Feb 27, 2012 4:40pm EST

Related Topics

* G20 "alert to" high oil price impact on economy
    * Dollar index gain helps pressure oil
    * Coming up: API oil stocks data 4:30 p.m. EST Tuesday

 (Recasts, updates prices, market activity)	
    By Robert Gibbons	
    NEW YORK, Feb 27 (Reuters) - Oil prices pulled back
 on Monday after a string of higher settlements as
concerns that high oil prices might curb economic growth, along
with the stronger dollar, countered supportive  fears about Iran
and potential supply disruptions.	
    Crude futures extended losses to more than $2 in
post-settlement trading after Brent ended a string of five
consecutive higher finishes and U.S. crude a string of seven
straight higher closes.	
    The Group of 20 finance ministers and central bankers said
on Sunday they were "alert to the risks of higher oil prices"
and discussed at length the impact that sanctions on Iran will
have on crude supplies and global growth. 	
    The G20 officials also said that they welcomed a commitment
from producer countries to ensure oil supplies.	
    The dollar index strengthened and the euro eased
against the U.S. currency, even as the Japanese yen recovered
from a nine-month low reached intraday against the dollar. A
stronger dollar can weigh on dollar-denominated oil by making it
more expensive for consumers using other currencies. 	
    "The energy complex is pulling back about 1 percent ...
partially on a softening in the equities and euro," Jim
Ritterbusch, president at Ritterbusch & Associates, said in a
note.	
    "Weekend G20 meetings also prompted some selling amidst some
reluctance to provide more European bailout packages,"
Ritterbusch added.	
    Brent April crude fell $1.30 to settle at $124.17 a
barrel, but falling as low as $123 post-settlement. Brent ended
at a near 10-month peak above $125 a barrel on Friday.	
    Brent remained on pace to post an 11 percent gain for
February and is up nearly 16 percent on the year after a 13.3
percent gain in 2011, raising fears of strains on some of the
world's fragile economies, particularly in Europe.	
    U.S. April crude fell $1.21 to settle at $108.56 a
barrel, but slipping to $107.27 in post-settlement trading.	
    U.S. crude is on pace for a 9 percent gain in February and
is up nearly 11 percent in 2012 after rising 8.2 percent last
year.	
    Brent's premium to U.S. crude CL-LCO1=R ended little
changed at $15.61 based on settlements, having recovered after
falling below $15 intraday.	
    The spread felt pressure after TransCanada Corp 
said it intends to build the southern leg of its Keystone XL
crude oil pipeline, running to Gulf Coast refineries, skirting a
full-blown federal review and helping move crude out of the
bottlenecked Cushing, Oklahoma, storage hub. 	
    The relative strength index (RSI) for both Brent and U.S.
crude retreated under 70 intraday, after starting Monday well
above that level. An RSI above 70 signals an overbought
condition to investors watching technical indicators.	
    Total trading volumes were tepid, with U.S. crude turnover 4
percent under and Brent volume 7 percent under their 30-day
averages with under an hour left in post-settlement trading. 	
    European equities fell, hit by concern about rising oil
prices denting economic growth as Greece's debt troubles
continued to unsettle investors. 	
    U.S. equities opened lower after the G20 told Europe it must
commit more money to fight the European Union debt crisis before
seeking broader assistance, but sliding oil prices helped
equities to recover.	
    The benchmark S&P 500 index closed at its highest level
since mid-2008, extending gains for a third straight session, as
oil's price slip boosted energy shares and after data showed
U.S. pending home sales neared a two-year high in January.
  	
    Germany's parliament approved a second Greek bailout package
despite growing German unease over Greece's ability to implement
austerity measures and remain in the euro zone. 	
 	
    Sanctions against Iran over its nuclear program have removed
a major supply source for many refiners and investors worry
escalating confrontation in the Middle East could disrupt oil
flows from other suppliers in the Gulf.	
    Japan's crude oil imports fell 2.1 percent in January from a
year ago and imports from Iran were down 12.2 percent
year-on-year, official data showed. 	
    Exports from several smaller producers, including South
Sudan, Yemen and Syria, have also been cut off in recent months,
tightening supplies to some markets.	
    But exports from Saudi Arabia and Nigeria have risen and
there has also been speculation about a release of U.S.
strategic reserves to offset lost Iranian barrels and combat
high prices.	
	
 (Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Manash Goswami; in Singapore; Editing by
Marguerita Choy and Bob Burgdorfer)
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