NYMEX crude futures fell in electronic dealings on Tuesday after traders said May Saudi oil supplies to Japan and Korea will increase, and some players locked in profits after gains of more than $3.50 in the last six trading sessions.
Brokers said trade was relatively cautious ahead of the reopening of the Brent crude market on London's International Petroleum Exchange, which has been closed since Friday for a long public holiday.
NYMEX May light crude spent most of the ACCESS trading session in the red, briefly touching a high at $37.85 a barrel, one cent up from Monday's settlement in New York.
At 0550 GMT, May NYMEX crude stood at $37.61 a barrel, 23 cents down on the day. US crude hit an intraday peak at $37.95 on Monday, when prices were lifted by soaring demand in China and worries over oil security with the rise in violence in Iraq.
Tony Nunan, manager at the international petroleum business division of Mitsubishi Corp in Tokyo said Asian players were especially bearish following Monday's news of a rise in Saudi term crude supplies to the Far East for May.
Some Japanese and South Korean refiners said on Monday that they had been notified they will receive full term contract volumes in May, up more than 10 percentage point from April. A heavy round of refinery maintenance in the kingdom had released more crude without wellhead production being increased, industry sources said.
Traders in the regional physical crude market said the extra Saudi oil would put price spot differentials for grades such as Oman under pressure.
The kingdom's allocations to the United States appear to be unchanged from last month and European volumes will become clearer today offices reopen.
"Asian people are more bearish than the US (on Saudi supply rise). They want to take profits now," said Nunan, who pegged first key support at $36.50 and resistance at $38.50.
Interfax news agency said on Tuesday that Russia was considering the evacuation of 500 nationals after eight Russians working for an energy company were taking hostage in Baghdad.
Most of the 500 nationals work in Iraq's oil and power sectors. Many foreigners have been seized in Iraq in the last few days along with an escalation of fighting between US forces and Iraqi insurgents.
Brokers said NYMEX activity was largely centred on spread trade. Out of 5,624 trades on the crude board at 0550 GMT, 3,026 were on spreads.
"Locals and some smaller organisations are taking profits. The funds look to be establishing long positions again, it looks like the funds are rolling May into June," said a broker based in London.
"After big gains in the last six trading sessions we'll probably go down today and consolidate, but we'll be looking to the IPE for guidance," he said.
IPE Brent was playing catch up with NYMEX gains on Monday, the front month May contract climbing 36 cents to $33.70 a barrel. Most Brent volume in the electronic session was based on June, August and September, which brokers said was likely due to arbitrage trade with NYMEX crude.
The next focus point for the market will be the US oil inventory data due to be released on Wednesday by the Energy Information Administration.
The US Energy Information Administration is scheduled to release its weekly inventory data on Wednesday.
NYMEX May gasoline fell 0.83 cent to $1.1720 a gallon, while May heating oil was down 0.21 cent at 94.03 cents a gallon.
On the Tokyo Commodity Exchange (TOCOM), benchmark September crude oil futures slipped 210 yen to 20,010 yen per kiloliters (yen/kl).
TOCOM October gasoline was at 29,770 yen/kl, down 40 yen, and October kerosene fell 200 yen to 30,160 yen/kl.
TOCOM October gas oil was 10 yen down at 28,410 yen/kl.
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