Crude oil futures tanked more than 4% Monday as traders unwound bullish positions in the wake of Iran's decision to release 15 detained British sailors and marines.
As a result, all of the gains made in the crude market since the crisis began on March 23 have been erased. Oil peaked slightly above $66 on March 29 before easing when Iran and the U.K. adopted a diplomatic posture in the standoff.
The May light sweet crude contract fell $2.77 to $61.51 a barrel in trading at the New York Mercantile Exchange. Reformulated gasoline slipped 4 cents to $2.09 a gallon, and heating oil was down 4 cents at $1.82 a gallon.
The near-term natural gas contract closed a penny lower at $7.55 per million British thermal units.
Energy traders appeared to shrug off an announcement from Iranian President Mahmoud Ahmadinejad that his country has begun to enrich uranium "on an industrial scale" with a system of 3,000 networked centrifuges. It was previously thought that Iran had fewer than 200 centrifuges.
With as many centrifuges as it claims to have, Iran could produce enough weapons-grade uranium to build a nuclear weapon within one year, according to analysts. Worries over Iran's nuclear ambitions have boosted energy prices in recent months.
The retraction of the May crude contract back below the $62 level suggests that traders are being complacent in thinking that U.N. sanctions against Iran over its advancing nuclear program won't invite supply disruptions, according to Tim Evans, an energy analyst at Citigroup Global Markets.