Oil retreats on profit-taking, euro zone concerns

Investors take profits from recent gains, while renewed concerns about euro zone's debt problems also pressure prices

Oil retreated in Asian trade today as investors took profits from recent gains, while renewed concerns about the euro zone's debt problems also pressured prices, analysts said.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in June was down 36 cents to $105.80 per barrel while Brent North Sea crude for June shed 23 cents to $119.43 in morning trade.

"There has been some profit-taking in the market after the WTI reacted very positively to strong US and Chinese manufacturing data," said Victor Shum, senior principal at Purvin and Gertz energy consultants in Singapore.

Crude prices had surged in late trade New York trade yesterday, supported by stronger-than-expected industrial data in the US and China, the world's top energy consumers.

Meanwhile, traders remain wary over the troubled state of the euro zone economy, analysts said.

World Bank president Robert Zoellick yesterday said that Europe would struggle to achieve needed economic reforms without growth to support them, adding that investors' focus is on the situation in Italy and Spain.

The two countries "are undertaking fiscal consolidation and structural reforms but that's very hard to do in a no-growth environment," he said.

Italy and Spain, the third and fourth-biggest economies in the euro zone, are in recession. Investors fear Spain, in particular, may be the next in the bloc to follow Greece, Ireland and Portugal to seek an international bailout.

"There is a bias towards the upside because of the signs that the US economy is recovering, but the debt situation in the euro zone will continue to be closely watched by investors," said Nick Trevethan, senior commodities strategist at ANZ Research.