Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive.
Futures lost as much as 0.7 percent after rallying 2.6 percent in the past two days as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that threatened growth in the world’s biggest oil-consuming country. Crude declined today as technical indicators showed futures may have risen too quickly for further gains to be sustainable, according to data compiled by Bloomberg.
“We’re getting a mild sell signal and the coincidence of those levels mean that some traders will be bailing out,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we’re seeing is longs closing out, taking some profit.”
West Texas Intermediate for February delivery dropped as much as 63 cents to $92.49 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.82 at 12:54 p.m. in Singapore. The contract yesterday climbed 1.4 percent to $93.12 a barrel, the highest settlement since Sept. 18. The volume was 37 percent below the 100-day average for the time of day.
Brent oil for February settlement on the London-based ICE Futures Europe exchange fell as much as 65 cents, or 0.6 percent, to $111.82 a barrel. Prices advanced 3.5 percent in 2012, a fourth annual gain. The number of contracts changing hands was 26 percent less than the 100-day average.
New York crude yesterday settled higher than the 30-day upper Bollinger Band for the fourth time in a week, signaling the market is overbought, according to data compiled by Bloomberg. Prices decreased in mid-September after closing above the same indicator, about $92.48 a barrel today. -BLOOMBERG
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