Oil Prices Pull Back

Updated from 10:47 a.m. EDT

Crude oil futures dropped as speculation mounted that an impasse with Iran over its nuclear program could be resolved soon.

Oil prices shed 48 cents to close at $73.61 a barrel as traders locked in profits from the recent rally On Friday, crude hit a high of $75.78 after North Korea test-fired seven missiles.

A drop in gasoline prices also supported falling crude prices. During the peak summer driving season, gasoline and oil generally rise and fall in tandem. Gasoline dipped 6 cents to finish trading at $2.17 a gallon, and heating oil was off 4 cents at $1.96 a gallon.

Prices have been declining since late Friday when Iran's top nuclear negotiator said talks with the European Union regarding its nuclear ambitions were positive. The West offered Iran an incentives package designed to persuade the world's fourth-largest oil producer to halt uranium enrichment. The two sides will meet formally on Tuesday.

On Monday, Iran's foreign minister said the country wouldn't respond to the package until the second half of August. The West had demanded that Iran respond before the G-8 Summit in Russia on July 15.

This year, crude prices have risen 21% on the back of the standoff with Iran, investors' appetite for commodities and production cuts in Nigeria and the Gulf of Mexico. Hedge funds have been pouring millions into energy as an alternative to the equity markets.

Output in Nigeria has been shaved by as much as 20% this year, thanks to a wave of attacks on the country's oil installations. Rebels have targeted the petroleum industry as a way to pressure the government and gain a share of the country's petrodollars for the poor, but oil-rich, Niger River Delta. Last week, two foreign oil workers were kidnapped by rebels and still have not been released.