Oil down, retreats from 3-1/2 year high ahead of US holiday

NEW YORK: Crude prices fell Tuesday, retreating from early gains that had lifted the U.S. benchmark as high as $75 for the first time in more than three years, which prompted traders with bullish positions to book some profits ahead of the July 4 U.S. holiday.

U.S. light crude dropped 94 cents to $73.00 a barrel by 11:35 a.m. EDT (1535 GMT), after hitting $75.27, a 3-1/2-year high. Benchmark Brent crude was down 31 cents at $76.96 a barrel after briefly touching a session low of $76.67 a barrel. Early in the session, Brent traded as high as $78.55 a barrel.

The early gains came after Iran appeared to threaten to disrupt oil shipments from the Middle East Gulf if Washington pressed ahead with sanctions. U.S. crude rose above $75 a barrel for the first time since 2014.

But the market pulled back as some thought talk of supply disruptions might be overblown, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. He also said traders could be moving to liquidate bullish positions.

Pressure to liquidate may have accelerated ahead of the U.S. holiday on Wednesday, said Tariq Zahir, managing member at Tyche Capital in New York.

Traders said supply disruptions could be short lived. They noted that OPEC and allies are ramping up output, while a production facility in Canada might restarts ahead of schedule or U.S. President Donald Trump might order oil released from the Strategic Petroleum Reserve.

Production at Syncrude Canada's 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta, was hit by a power outage last month and is likely to remain offline through July.

Oil's early gains came after the website president.ir quoted Iranian President Hassan Rouhani as dismissing Washington's attempt to stop iran's oil exports "because it has no meaning for Iranian oil not to be exported, while the region's oil is exported."

While the comments were ambiguous, Iranian officials in the past have threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile U.S. action against Iran.

Asked whether he intended to make a threat, Rouhani declined to provide a clarification.

"Just the threat to (the Strait of) Hormuz would add uncertainty and warrant a certain risk premium," Carsten Fritsch, senior commodities analyst at Commerzbank told Reuters Global Oil Forum.

The American Petroleum Institute will report estimates for U.S. inventories at 4:30 p.m. EDT (2030 GMT) on Tuesday.