Crude Oil Falls as Traders Sell Contracts to Lock in Gains

Crude oil fell in New York as traders sold contracts to lock in gains after prices reached a seven- month high yesterday when investors sought commodities as a hedge against inflation.

Oil had gained late in trading yesterday, paring losses earlier in the day, as the dollar declined on speculation record U.S. borrowing will undermine the currency. Investors who made bets that prices will rise, or so-called long positions, sell their contracts to make profits. Crude surged 23 percent to yesterday’s intraday high of $69.05 a barrel since May 15.

“We’ve had quite a steep rally considering we haven’t had a huge amount of evidence that a recovery is taking place,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “The fact that the dollar has declined so sharply has been supportive but if you look back at fuel demand we’ve seen a fall in global demand.”

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