Crude At One Week Low On Profit Taking And Possible Talks Over Iran’s

After weeks of strong gains amid signs of economic recovery in the world’s two biggest crude consumers and tensions in the Middle East, crude is trading near the lowest in a week amid possible talks over Iran’s nuclear program and forecasts of rising stockpiles in the U.S.

Crude is trading as of this writing around the $95.99 a barrel level compared with the opening at $96.10 and with the highest at $96.15 and the lowest at $95.90. On the short term crude finds support at $95.40 then at $94.95 and resistance at $96.30 then at $96.80.

Crude have been supported lately by the signs of economic recovery in the U.S. and China, the tensions in the Middle East and the dollar’s weakness, yet as the outlook for oil demand dimmed amid political uncertainties in Europe, traders were prompted to take profits.

The diminished optimism that Europe was slowly healing from its debt crisis, the stronger dollar, profit taking, easing tensions in the Middle East and forecasts of rising stockpiles in the U.S., were all factors weighing on oil prices on Tuesday.

U.S. crude stockpiles probably rose 2.5 million barrels last week, gasoline supplies increased 1.8 million barrels and distillate inventories including eating oil and diesel, declined by 500,000, the U.S. Energy Department report may show tomorrow.

Adding to the downside pressures on oil prices was the rise in the U.S. factory orders below expectations and the political uncertainties in Spain and Italy that threatens to disrupt the eurozone`s efforts to solve the debt crisis, pushing the euro lower and the dollar higher, hurting oil prices by making crude more expensive.

“The oil markets are taking a breather after the recent gains, and are likely to consolidate around these levels… Yet the main concern at the moment is Europe and the U.S. economic data that has also been mixed”, said Ker Chung Yang from Philips Futures.

Oil prices may extend losses as markets welcomed the possibility of direct talks between Iran and the U.S. over its nuclear program, easing some of the tensions from the Middle East. The talks may be held in Kazakhstan on Feb. 25.

Brent is trading as of this writing around the $115.14 after falling 0.40%; natural gas is trading at $3.330 per 1,000 cubic feet after rising 0.45%; gasoline is trading at $3.0114 a gallon after falling 0.01%; heating oil is trading at 3.1504 after falling 0.11%.

Markets are eyeing later this day Germany’s and UK’s PMI services, eurozone’s retail sales, and the U.S.’s ISM services for January which may fall to 55.00 from 55.7 previous.