Oil dips on profit-taking after recent rally

By @ibtimes on

Oil prices dropped back on Thursday in a bout of profit-taking as investors paused after a hefty rally on supply worries amid the fighting in Libya and growing unrest in the Middle East.

Trading was volatile and volume thin as investors awaited the next turn of events in the Middle East and as they also weighed developments surrounding Japan's nuclear crisis.

U.S. crude oil futures fell 74 cents to $105.01 a barrel, having extended the day's low to $104.76. It earlier hit a session high of $106.69, near the March 7 peak of $106.95, the highest since September 2008.

In London, May Brent was down 12 cents to $115.43 after dipping to $114.50, the session low, earlier.

The propensity to take profits is pretty strong here after moving up about $10 since March 16 and (U.S. crude) ran into some resistance ahead of the year's high at $106.95, said Andrew Lebow, broker at MF Global in New York

Brent has been held back by a big unwind of the Brent/WTI, Lebow added.

The volatile trading scenario caused Brent's premium against its counterpart U.S. crude to retrace upward to above $10, after dipping early to below $9.

Earlier, news that a French fighter jet, part of a U.N. coalition enforcing a no-fly zone over Libya, had destroyed a Libyan war plane, pulled back Brent crude from negative territory.

Brent crude fell earlier on concerns about euro zone debt problems following the resignation of Portugal's Prime Minister Jose Socrates on Wednesday.

U.S. crude oil had been pressured earlier by economic data showing new orders for long-lasting manufactured goods fell in February, but was supported by improved labor market data and persistent worries about unrest in the Middle East and fighting in Libya.

A French warplane destroyed a Libyan military aircraft with an air-to-ground missile as it was landing at Misrata air base in western Libya on Thursday, France's armed forces said.

Allied warplanes hit military targets deep inside Libya but failed to prevent tanks reentering the western town of Misrata, underlining the difficulty of the U.N.-based mission to protect Libyans from government forces.

In Yemen, soldiers loyal to President Ali Abdullah Saleh clashed with army units backing opposition groups demanding he step down while in Syria, at least 37 people were killed in the city of Deraa, as protests grew, prompting the government to promise it would to protesters' demands.

In Bahrain, opposition activists said they planned to hold a day of demonstrations throughout the tiny island country on Friday in defiance of a ban on all public gatherings. >

(Additional reporting by Robert Gibbons in New York; Claire Milhench in London; and Alejandro Barbajosa in Singapore; Editing by Walter Bagley)

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