Oil slumps on demand, price-reversal warnings
NEW YORK |
(Reuters) - Oil fell sharply on Tuesday, with U.S. crude down over 7 percent in two days, as Goldman Sachs warned again of a price reversal and the International Energy Agency said high prices could be eroding demand.News that lackluster demand caused Saudi Arabia to reverse a recent output hike designed to make up for production shut down by Libya's conflict also weighed on the market.
Brent crude for May fell $3.28 to $120.70 a barrel by 11:21 a.m. EDT (1521 GMT).
U.S. crude lost $3.75 to $106.17.
Investors that bought into the oil market in the past few months could now be making a move to exit, according to Brendan Brown, head of economic research at Mitsubishi UFJ Securities.
"I think we are going to see some sort of a rotation, with some investors deciding to get out and take some profit," Brown told Reuters.
That seemed to be Goldman Sachs' (GS.N) message for the second straight day on Tuesday.
Goldman expects Brent to fall toward $105 in coming months, the bank said in a note emailed to clients on Tuesday, a day after the bank recommended closing its 'CCCP Basket' trade, which includes a 40 percent weighting in U.S. crude futures.
(Additional reporting by Gene Ramos in New York, Ikuko Kurahone, Dmitry Zhdannikov and Zaida Espana in London and Chikako Mogi and Risa Maeda in Tokyo; Editing by Dale Hudson)
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