* Silver turns lower, helps spark profit taking in oil
* Middle East, Nigeria unrest remain supportive to oil
* Coming up: API oil data at 4:30 p.m. EDT Tuesday
(Recasts, updates prices and market activity)
By Robert Gibbons
NEW YORK, April 25 (Reuters) - Oil prices fell on Monday
after U.S. crude hit its highest level since September 2008, as
investors took profits on a sell off in silver from near record
highs.
Spot silver <XAG=> fell sharply off a session high on
technical selling triggered after it failed to breach 1980
highs. []
Earlier in the day, oil and commodities had risen as
inflation fears weakened the dollar and as markets eyed
continued unrest in Libya, Nigeria and the Middle East.
On Monday, the dollar index <.DXY> measuring the greenback
against a basket of currencies bounced into positive territory
after silver turned back.
Continuing unrest in the Middle East and OPEC member
Nigeria underpinned oil, highlighting potential threats to
supply.
"Silver's sell off spilled over to crude markets and
traders took profits," said Dan Flynn, analyst at PFGBest
Research in Chicago.
Brent crude for June <LCOc1> fell 69 cents to $123.30 a
barrel by 12:17 p.m. (1617 GMT), after reaching $124.75.
U.S. crude <CLc1> for June fell 45 cents to $111.84,
retreating from an early $113.48 peak, the highest intraday
price since September 2008.
"It looks like we're seeing some technical selling after
touching -- but failing to really break above -- the previous
high, with some maybe seeing the risk of a double-top," said
Andy Lebow, broker at MF Global in New York.
Monday's early U.S. peak only eclipsed the 2011 peak from
April 11 by 2 cents.
"It's a quiet market with London out. With the dollar
coming off its lows, it's not surprising to see a little
profit-taking," added Lebow.
Trading volumes were tepid at midday in New York, with
total U.S. crude volume just above 200,000 lots, 67 percent
below the 30-day average, according to Reuters data. Brent
volumes were 80 percent under the 30-day average.
The light volume came as investors returned from a long
holiday weekend and ahead of a U.S. Federal Reserve two-day
policy meeting this week.
The Fed will has scheduled a news conference for Wednesday,
as investors seek clues about the outlook for monetary policy
as the Fed's bond buying program nears its end in June.
Oil supply worries stemming from geopolitical turmoil have
buoyed oil and precious metals, as have expectations the dollar
would remain pressured as other central banks moved to tame
inflation more aggressively than the Fed.
But the threat to oil demand from high prices contributed
to oil's recent seesaw trajectory. In recent weeks, prices have
slumped, then rebounded, after key forecasters, including
Goldman Sachs, said lofty prices were hindering consumption and
that price corrections could be expected.
SUPPLY THREATS REMAIN
NATO forces flattened a building in Muammar Gaddafi's
compound, while forces loyal to the Libyan leader have
bombarded the western rebel stronghold of Misrata.
[] []
In Syria, a small non-OPEC oil producer, troops and tanks
stormed Deraa, residents said, moving to crush resistance in
the city where a month-long uprising first erupted against the
rule of President Bashar al-Assad. []
In Yemen, neighbor to top oil exporter Saudi Arabia,
security forces opened fire to block a thousands-strong protest
amid uncertainty over a Gulf plan for President Ali Abdullah
Saleh to step down within weeks. []
More than 500 people were killed in post-election violence
in OPEC-member Nigeria, Africa's top producer, according to a
human rights group. []
Nigeria's production is often under threat from militant
groups and sees turmoil increase during election season.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a 24-hour technical outlook on U.S. oil:
http://graphics.thomsonreuters.com/WT1/20112504084605.jpg
For a 24-hour technical outlook on Brent oil:
http://graphics.thomsonreuters.com/WT1/20112504090558.jpg
For stories on Libya & Middle East crisis: []
For a TAKE-A-LOOK on Middle East, N Africa:[]
For an analysis on unrest in Yemen: []
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OPEC has signalled that members with spare capacity are
ready to pump above agreed limits if there is a need. But
despite Libya's civil war and other potential supply threats,
Gulf delegates told Reuters the producer group is unlikely to
formally change output targets at a meeting in June.
[]
(Additional reporting by Gene Ramos and David Sheppard in New
York, Barbara Lewis in London and Florence Tan and Manash
Goswami in Singapore; Editing by John Picinich)
