New record: oil futures moved above $112 a barrel as a weekend cut in the US Federal Reserve's discount rate spooked traders
Crude continues tumble
US crude oil futures ended lower on Monday as profit-taking hit commodities markets amid mounting concerns about a slowing economy and continued banking and credit uncertainty.
Crude futures retreated only after reaching a record peak near $112, lifted by the weak dollar.
Nymex April crude dropped $4.53, or 4.11%, to settle at $105.68 a barrel, trading as low as $103.23 after reaching a record $111.80.
Reuters reported that the sharp losses in crude oil futures were seen as a temporary set back by most technical analysts who viewed the move as a bull market correction.
The dollar tumbled to a 12-1/2 year low against the Japanese yen on Monday and record levels against the euro and the Swiss franc as emergency liquidity-boosting measures by the Federal Reserve over the weekend failed to ease worries about the US financial sector.
Meanwhile, US Vice President Dick Cheney said crude oil prices in excess of $100 a barrel reflect the reality in the market place.
He told reporters on Monday there was limited excess oil production capacity worldwide. Dollar weakness was also an element pushing prices to record levels, he added.
"One of the problems we've got now obviously is that there is not a lot of excess capacity worldwide," Cheney said at a news conference in Baghdad with reporters travelling with him.
He said also there was a "much closer balance between supply and demand, as well as the declining value of the dollar, you've got a situation in which we've seen the price of oil rise fairly dramatically in recent months ... but it reflects primarily the realities in the marketplace," Cheney said.