Decline in crude oil prices triggers profit-taking

term triggered a bout of profit taking in risky assets, causing investors to sell equities and slash their bets against the yen and US dollar.
The global rout in commodity prices also hurt demand for the Australian dollar, which dropped 2 percent against the yen, and weighed on US stock futures.
The drop in crude was triggered in part by a Goldman Sachs report, which advised investors to lock-in trading profits before oil and other commodity markets reverse.
“Open interest has been building up since the start of the new quarter in April, reflecting fresh inflows of speculative money into the oil market,” said an energy analyst at a leading Japanese trading house who declined to be named.
“The Goldman report put a damper on this flow, at least for now, given that there was a sense of an overshoot in the market,” he said.
Brent crude for May fell to a low of US$121,97 a barrel, easing from Monday’s 32-month peak of US$127,02. US crude fell to as low as US$107,87.
Developments in Libya, where a peace bid collapsed on Monday, may also provide cues.
Brent may fall to as low as US$118,67, while US crude may find support at US$106,81, charts indicated.
Commodity shares from Australia to Japan led a broad decline in Asian equities, after energy and metals prices slid overnight, while gold and silver, traditionally safe-haven investments, also gave up gains. Tokyo’s Nikkei share average ended the day down 1,6 percent, as blue-chip stocks declined on increasing uncertainties about the earnings outlook after the March 11 earthquake.
“Many people worry that more and more large-cap companies including big automakers may cut their earnings estimates for the business year,” said Hideo Arimura, senior fund manager at Mizuho Asset Management.
The MSCI index of Asia Pacific shares outside Japan was down 1,8 percent and on course for the biggest daily decline since the quake in Japan triggered panic selling in the region on March 15.
Days after that though foreign investors had been key buyers of Asian shares, pushing the benchmark indexes of major markets up between 7 percent and 13 percent over the past three weeks. – Reuters.