U.S. crude oil futures slipped lower Monday, part of a slump across commodities and equities markets as investors grow skeptical that a month-long rally can continue.
Light, sweet crude for March delivery settled $1.60, or 1.6%, lower at $96.17 a barrel on the New York Mercantile Exchange, handing back all of last week's gains and retreating from a four-month high. Brent crude on the ICE futures exchange fell $1.16 to $115.60 a barrel.
Oil prices followed stock markets lower as the Dow Jones Industrial Average dropped back below 14000, the first triple-digit decline this year. Meanwhile, the dollar rose against the euro, which typically results in falling oil prices as it makes crude more expensive for buyers using other currencies.
After strong rallies in oil, stocks and other raw materials since the start of the year, analysts and traders said the markets were due for a correction as investors locked in recent gains.
"We are just having a flight out of commodities, out of equities," said Matt Smith, an analyst at Summit Energy, who attributed the losses to profit taking by investors. "It was bloodletting across the board."
The euro recently traded at $1.3517, down 0.9% from Friday.
Oil prices have been on a tear to start the year. Even with Monday's losses, the market has gained 4.7% in 2013 a investors cheered economic data that showed a better labor market in the U.S. and renewed confidence among businesses and consumers. The stock market has also rallied, and oil traders often use stocks as an indicator of investors' overall economic outlook.
But as oil prices pushed toward triple digits last week, some market watchers said technical indicators suggested that futures were due to retreat.
"We definitely got a boost from the economic optimism, but all good things come to an end," said Phil Flynn, an energy analyst at Price Futures Group. "We've had an incredible run."
Meanwhile, oil traders are also looking ahead to Chinese economic data due later this week. China will begin releasing January data Friday.
As the world's second-largest oil consumer, the reports on inflation and trade will likely keep traders' attention for any signals about the country's oil demand.
Front-month March reformulated gasoline blendstock, or RBOB, settled 4.21 cents lower at $3.0115 a gallon. March heating oil settled 0.66 cent lower at $3.1540 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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