Oil slips after 14pc gain in Feb

Oil prices fell to near US$109 a barrel yesterday after a 14 per cent gain this month that was driven by signs of an improving US economy and fears of an Iran supply cut. Benchmark crude for April delivery was down US40c to US$109.33 a barrel at noon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose US$1.94 to settle at US$109.73 in New York on Saturday. Brent crude fell US10c to US$125.37 a barrel in London. Crude has soared from US$96 this month as stronger United States economic indicators bolstered investor confidence. Government figures show crude demand growth has slowed in the US from a year earlier, but some traders are betting a strengthening economy will eventually boost consumption. "This is what happens when the US begins to climb back up the mountain and recovers," said Larry Carl of Oil Outlooks and Opinions. Concern that tensions over Iran's nuclear programme could lead to global crude supply disruptions have also pushed prices higher in recent weeks. Some investors "fear that the world is headed toward an ugly conclusion of the Iranian nuclear crisis", energy consultant Cameron Hanover said in a report. "The market is discounting an increasingly violent and unwelcome ending. "If Iran were to allow inspection of its nuclear site, or if it were to come back to the negotiating table, then prices might suddenly sell off," it said. In other energy trading, heating oil fell US1.5c to US$3.30 a gallon and petrol futures slid US0.8c at US$3.32 a gallon. Natural gas fell US4.3c to US$2.51 per 1000 cubic feet. "America is still the biggest consumer of oil and we are also the most freewheeling buyers." Investors will this week be closely watching the latest US consumer confidence data and the Federal Reserve's so-called Beige Book report on economic activity.