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By Santosh Menon
LONDON, May 12 (Reuters) - Oil retreated below $125 a barrel
on Monday in volatile trade that saw it briefly hit an all-time
high earlier in the session.
U.S. light crude <CLc1>, down more than $2 at one point,
rallied to a new record of $126.40 a barrel, but by 1617 GMT it
was $1.04 down at $124.92.
London Brent crude <LCOc1> futures, whose nearby contracts
have moved into contango, fell $1.78 down to $123.62.
A contango structure suggests plentiful supplies and if
sustained, could imply lower prices. Brent had been in
backwardation, where prompt prices are higher than those further
forward and is associated with limited availability of oil.
The dollar fell against the euro on renewed concerns the
Federal Reserve could still have to cut interest rates to boost
growth. It had risen a full percent against the yen and
approached a two-month high against a basket of currencies
earlier on Monday.
Separately, data released by China showed that crude oil
imports fell 3.9 percent in April from a year earlier, the first
decline in 18 months, after refiners slashed purchases from
March's record high and stepped up refined fuel imports.
"We sold off on the Chinese import data, which suggested
prices at these levels are weighing on demand. But we've pared
those losses," said Eric Wittenauer at AG Edwards.
"Time and again, this highly resilient market has sold off
only to recover and hit new highs."
Crude oil speculators on the New York Mercantile Exchange
increased net long positions in crude oil to 63,218 in the week
to May 6, up from 53,311 in preceding week, data from the
Commodity Futures Trading Commission showed on Friday.
Oil has jumped about 13 percent since slipping to $110.53 a
barrel on May 1, as investors seized on supply disruptions in
the North Sea and Nigeria, and galloping demand for distillate
fuels, notably diesel.
ICE gas oil futures <LGOc1> fell more than $8 on Monday on
the expiry of the prompt contract, after rising to near last
week's record high of $1,210 a tonne in early trading.
Some analysts have attributed the gains in oil to a wave of
fund money pouring into commodities, given the weaknesses in
other financial markets.
A recent Sanford C. Bernstein study said that investment
flows in the Standard & Poor's GSCI index and Dow Jones-AIG
Commodity Index had risen to $250 billion so far this year, up
from $169 billion at the start of the year.
Oil's runaway gains prompted talk last week OPEC could
consider boosting output before its next scheduled meeting in
September should crude oil prices keep rising. [].
But oil ministers from Ecuador, Qatar, the UAE and an
Iranian oil official said there were no plans for an early
meeting as soaring prices were out of OPEC's control.
(Additional reporting by Fayen Wong in Perth and Richard
Valdmanis in New York, Editing by William Hardy)
