Oil prices pulled back on Monday after a string of higher settlements as G20 concerns about the effect of high oil prices on global growth and a stronger dollar helped counter support from worries about Iran and potential supply disruptions. The Group of 20 finance ministers and central bankers said on Sunday they were "alert to the risks of higher oil prices" and discussed at length the impact that sanctions on Iran will have on crude supplies and global growth.
The G20 officials also said that they welcomed a commitment from producer countries to ensure oil supplies. The dollar index strengthened and the euro eased against the US currency, even as the Japanese yen recovered from a nine-month low reached intraday against the dollar. A stronger dollar can weigh on dollar-denominated oil by making it more expensive for consumers using other currencies.
"The energy complex is pulling back about 1 percent ... partially on a softening in the equities and euro," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note. "Weekend G20 meetings also prompted some selling amidst some reluctance to provide more European bailout packages," Ritterbusch added.
Brent April crude fell $1.32 to $124.15 a barrel by 2:59 pm EST (1959 GMT), having settled at a near 10-month peak above $125 a barrel on Friday after five straight higher closes. Brent remained on pace to post a nearly 12 percent gain for February and is up nearly 16 percent on the year after a 13.3 percent gain in 2011, raising fears of strains on some of the world's fragile economies, particularly in Europe. US April crude fell $1.21 to settle at $108.56 a barrel, having swung from $108.24 to $109.77 and snapping a string of seven straight higher closes.
US crude is on pace for a 10 percent gain in February and is up nearly 11 percent in 2012 after rising 8.2 percent last year. Brent's premium to US crude was little changed near $15.60 a barrel, having recovered after falling below $15 intraday. The spread felt pressure after TransCanada Corp said it intends to build the southern leg of its Keystone XL crude oil pipeline, running to Gulf Coast refineries, skirting a full-blown federal review and helping move crude out of the bottlenecked Cushing, Oklahoma, storage hub.
The relative strength index (RSI) for both Brent and US crude remained above 70. An RSI above 70 signals an overbought condition to investors watching technical indicators. Total trading volumes were tepid, with US crude turnover 10 percent under the 30-day average in post-settlement trading. Brent volume also was 10 percent under the 30-day average. European equities fell, hit by concern about rising oil prices denting economic growth as Greece's debt troubles continued to unsettle investors. US equities opened lower following the S&P 500's four-year closing high last week and after the G20 told Europe it must commit more money to fight the European Union debt crisis before seeking broader assistance.
Stocks later edged higher as oil's price slip boosted energy shares and after data showed US pending home sales neared a two-year high in January. Sanctions against Iran over its nuclear program have removed a major supply source for many refiners and investors worry escalating confrontation in the Middle East could disrupt oil flows from other suppliers in the Gulf. Japan's crude oil imports fell 2.1 percent in January from a year ago and imports from Iran were down 12.2 percent year-on-year, official data showed.