Oil prices steady after surprise plunge

Crude prices steadied on Tuesday as traders struggled to explain a mysterious overnight plunge in New York, analysts said. Brent North Sea crude for delivery in November eased eight cents to $113.71 a barrel in London midday trading. New York\'s main contract, West Texas Intermediate (WTI) or light sweet crude for October, pulled back 35 cents to $96.27 a barrel. \"The major piece of overnight news has been the collapse in oil prices late in the North American session,\" added RBC Capital Markets analyst Michael Turner. He added: \"A few reasons were bandied around, including murmurs of a strategic oil release, fat fingers or high-frequency (automatic electronic) trading, but generally heads are still being scratched.\" In unusually volatile deals, Brent and WTI oil prices suddenly tumbled by about $4 in intraday trade. \"Yesterday saw a mysterious drop in oil prices: within just a few minutes, WTI and Brent both fell for no apparent reason -- without there being any impetus from the currency side, from the equity markets or in terms of other news,\" said Commerzbank analyst Carsten Fritsch. \"Such pronounced price fluctuations give rise to criticism of high-frequency trading and the excessive influence of speculative investors on the most important commodity, and are likely to be closely monitored by policy-makers and stock exchange regulators.\" Some market watchers suggested that the price slump could be the result of a so-called \"fat finger\" trading error. Traders had also been spooked by market speculation that US President Barack Obama\'s administration would release strategic supplies of gasoline (petrol) to lower prices ahead of the November 6 election. Analysts at the Vienna-based consultancy JBC Energy argued that many traders were taking profits, after the market had spiked higher last week on news of the US Federal Reserve\'s new economic stimulus. \"The fact that the sell-off occurred on both exchanges implies that this was no technical glitch, but rather a profit-taking strategy by major market participants that were worried about a price correction,\" JBC analysts said. \"Adding further credence to this view is the fact that as of this morning the markets have been trading below yesterday\'s settlement. \"In fact, the speculative phase of QE3 can be viewed as largely responsible for the gains in crude prices over August.\" Oil had surged last week to four-month highs after the Fed embarked upon a third phase of quantitative easing or QE3 to boost the US economy -- which is the world\'s top crude consuming nation.