(Updates prices in paragraph 2-3, euro paragraph 5, GE in
paragraph 8)
SINGAPORE, April 14 (Reuters) - Oil prices fell below $110
a barrel on Monday, backing further away from last week's
record high as the dollar gained following an unexpected
warning from the Group of Seven against excessive currency
fluctuations.
U.S. light, sweet crude oil futures for May delivery <CLc1>
fell 48 cents a barrel to $109.66 by 0514 GMT after having
gained 3 cents on Friday. Prices hit a record high $112.21 a
barrel on Wednesday after a big fall in U.S. crude and fuel
stocks.[]
London Brent <LCOc1> crude fell 52 cents to $108.23 a
barrel.
After meeting on Friday, G7 finance ministers and central
bankers issued a statement saying they were concerned by the
sharp moves in foreign exchange markets in recent weeks. That
was a marked change in their tone and was taken as a warning
that the dollar was falling too fast. []
The euro fell to trade at $1.5709 <EUR=>, having slid from
$1.5835 late in New York on Friday, putting pressure on other
commodities such as gold, which fell 1 percent. []
Gains in oil and commodity markets have been fuelled in
part by investors and speculators seeking a hedge against
inflation and the falling dollar, but some analysts said this
relationship may have gone as far as it can go.
"Non-fundamental factors, such as the exchange value of the
U.S. dollar, continue to play a role in setting the tone for
price direction, but may have potentially peaked in terms of
maximum bullish impact on crude oil prices," Martin King,
analyst with First Energy Capital, said in a report.
The growing gloom over the outlook for the U.S. economy
following a nasty earnings surprise from General Electric Co
<GE.N> and a drop in U.S. consumer confidence to its lowest in
more than a quarter century added to the pressure on oil.
"With the headwinds in the global crude oil market starting
to blow harder, the smooth sailing days for crude oil prices
may be coming to an end."
The dollar had fallen on Friday, offsetting the bearish
impact of the sharpest one-off cut in the International Energy
Agency's global oil demand growth forecast since 2001.
The energy watchdog slashed its 2008 global oil consumption
forecast by 460,000 barrels per day (bpd) to 1.27 million bpd
due to high prices and the faltering U.S. economy, but said
demand from China and the Middle East remained largely intact.
[]
Iran, whose ongoing pursuit of a nuclear programme has
created a stand-off with the West that has unsettled oil
markets, hinted on Sunday that it may soon make a new
diplomatic push to resolve the issue.
Foreign Minister Manouchehr Mottaki said Tehran would soon
unveil proposals aimed at resolving "international" and other
problems. He didn't explicitly mention the nuclear dispute, but
said they would announce details in the near future.
[]
On the supply side, Shell Oil Co said the 667-mile (1,073
kilometre) Capline crude oil pipeline, which brings crude from
the Gulf of Mexico to the U.S. Midwest, remained shut on Sunday
afternoon as work continued to repair a leak. It could not
estimate when the line would return to service. []
Short-term speculators in the crude oil market, who had
sharply cut their bullish bets since mid-March, increased their
net long positions in the week to April 8, according to
regulatory data released on Friday.
Net crude long positions rose to 64,699 lots, up from
47,073 in the previous week, the CFTC reported, just as U.S.
oil prices rallied to a record high on Wednesday.
[]
(Reporting by Jonathan Leff; Editing by Jacqueline Wong)
