Oil tumbles nearly $3
Closes below $62 on heavy fund selling, easing tensions in the Middle East.
NEW YORK (CNNMoney.com) -- Oil prices plunged over 4 percent Monday, driven down by heavy fund selling and unwinding political tensions in the Persian Gulf.
U.S. crude for May delivery tumbled $2.77 to settle at $61.51 a barrel on the New York Mercantile Exchange.
One trader attributed much of the fall to selling by the Goldman Sachs Commodity Index, a fund heavily invested in oil futures.
Nauman Barakat, an energy trader at Macquarie Futures, the trading arm of Macquarie investment bank, said the fund sells the current month's contract and buys the next month's contract on the fifth trading day of every month - in this case selling the May contract and buying June's.
"It's the Goldman roll," said Barakat. "It's like clockwork."
Barakat said June's contract fell also Monday, although not by as much, and the difference between the May and June contract narrowed.
Analysts also said Iran's decision to release the 15 British hostages it was holding since last month was easing prices.
Although the sailors and marines were released last Wednesday, the news came on the same day the U.S. Energy Information Administration reported a big drop in gasoline stocks, which limited oil's decline. Plus, the NYMEX was closed on Friday for the Good Friday holiday.
"The British sailors were reunited with their families on Friday, removing a source of buying from the crude oil market," Peter Beutel, an oil analyst at Cameron Hanover, wrote in a research note Monday.
Oil prices jumped $4 to $5 shortly after the sailors were captured at the end of March, as traders feared it could spark a conflict with Iran, the world's fourth largest oil producer and exporter.
Crude prices are now trading in the middle of their average range for the last several weeks, which has gone from around $55 to $65. But oil prices have swung widely in the last year, hitting a trading high of $78.40 last July before briefly falling below $50 at the start of 2007.