NEW YORK: Oil prices plunged more than 3 percent Tuesday, falling from a 27-month high, as profit-taking struck the commodities complex following a series of peaks over the thin holiday trading period. Traders said the abrupt selling across energy, metal and agricultural markets reflected a correction to the rally that had capped 2010, rather than a sudden reversal of the optimism that made commodities the top asset class last year. Trading volume recovered to its highest levels since mid-December. US crude oil for February delivery fell $2.83, or 3.08 percent, to $88.72 a barrel at 12:42 P.M. EST (1742 GMT), sliding from an intraday peak of $92.07. It was the biggest one-day percentage decline since mid-November. Total US crude futures trading volume rebounded sharply, after being thinned by the holidays, and was above 542,000 lots during the noon hour in New York, already closing in on the 30-day average of 543,358 lots. In London, ICE Brent crude for February fell $1.93 to $92.91 a barrel, well off an early $95.74 peak. Brent crude's premium to US benchmark West Texas Intermediate crude rose to $4 a barrel intraday Tuesday, the highest in two weeks, as US crude prices slid more than 2 percent. “We had an end-of-year run-up and now we are getting the beginning-of-the year sell-off,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. Additional pressure came from a rebound in the dollar, which turned positive on an improving US economic outlook. In other Nymex trading, heating oil fell 5.44 cents to $2.4984 a gallon and gasoline futures lost 2.96 cents to $2.3979 per gallon. February natural gas futures lost 1.1 cents at $4.639 per 1,000 cubic feet. After weeks of mostly positive global economic news, the price of oil has risen over the past month from about $88 a barrel. “Everybody has been so bullish on 2011 ... the mentality has just been buy it, buy it, buy it,” said Tom Bentz, analyst at BNP Paribas Commodity Futures. “The question everyone has is how much further do we have to go.”
