Oil prices gave up some of Monday's record gains on Tuesday, as investors cashed in on an increasingly bullish market.
Brent crude, the global benchmark, was down 0.62%, at $58.07 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate Futures were trading down 0.42%, at $52 a barrel.
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"We are witnessing some profit-taking," said Ole Hansen, head of commodity strategy at Saxo Bank. He said a stronger U.S. dollar Tuesday could also be incentivizing some investors to boost their profits on the back of higher oil prices.
"It's been a hell of a run and [Brent] is now approaching the psychologically important mark of $60 a barrel," Mr. Hansen added.
Brent on Monday closed up 3.8%, at $59.02 a barrel, its highest settlement since July 2015, while U.S. crude futures settled nearly 23% above this year's low of $42.53 a barrel on June 21.
Crude prices were boosted on Monday after Turkish President Recep Tayyip Erdogan responded to the Kurdistan independence referendum by threatening to close off a pipeline that carries roughly 500,000 barrels a day from its neighbor to the global market. Kurdistan is a semi-autonomous region in northern Iraq that borders Turkey, which has its own Kurdish minority.
"The potential impact from any disruption is fairly significant, with the pipeline having the capacity to ship 700,000 barrels a day," according to analysts at ING Group.
But the possibility of losing global oil supply was not the only factor in the ongoing recovery in prices.
A wave of bullish data this month, including from the International Energy Agency, have pointed to rising demand and falling commercial crude inventories. At the same time, investors seem more confident in the Organization of the Petroleum Exporting Countries' plan to rebalance the market through its production-cut agreement, analysts say.
"Apart from the bullish waves triggered by the Kurdish referendum, the market genuinely thinks global stocks have started to fall," wrote Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd., in a note Tuesday.
OPEC and 10 producers outside the cartel, including Russia, first agreed late last year to cap their production at around 1.8 million barrels a day with the aim of alleviating global oversupply and boosting prices. The deal was extended in May through March 2018 and signatories have recently indicated a willingness to potentially hold back production through next year.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 1.08%, at $1.63 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $548.25 a metric ton, down 0.59% from the previous settlement.
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(END) Dow Jones Newswires
September 26, 2017 06:37 ET (10:37 GMT)