Crude oil futures declined at the end of trading yesterday, after surging to a three-day high on account of traders taking advantage of the price surge in order to gain profits. WTI crude futures fell by 1.37 percent to USD $ 101.15 a barrel. Brent crude futures declined by 1.22 percent to USD $ 114.49 a barrel.
Oil advanced yesterday on the strength of a number of economic news which hinted towards the global economy being on a strong path of recovery. German exports in March increased by 7.3 percent from February. Also, US Payrolls increased by 244,000 in March, the largest increase in the number of people employed since May 2010.
Oil futures also surged due to fears that the Mississippi River will flood Louisiana oil refineries. A total of 11 oil refineries, which together account for 13 percent of US oil output, are expected to be closed down on account of possible flooding. Fears about supply disruptions increased the price of the WTI futures.
However, by the end of the day, oil futures had declined, since investors sold their contracts in order to take advantage of the mid-day surge in oil prices. Apart from this profit-taking exercise, the increase in the margins required for speculating with the oil futures also contributed to the price drop. CME Group, the owners of NYMEX, increased the margins from USD $ 6750 per contract to USD $ 8438 per contract. This move has discouraged a significant number of speculators from speculating in the market, leading to a selloff of futures that have led to the price drop.
The futures also declined on expectations that a report to be released today will show that Chinese exports declined in April.