-- Crude futures edge lower following sharp rally Friday. -- Money managers' bets oil prices will rise expected to have declined last week. -- Signs relationship between Sudan and South Sudan is thawing. -- Iran remains major wild card. By Sarah Kent Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Crude-oil futures edged lower Monday after a Petrologistics report saying exports from Iran are expected to fall this month sparked a sharp rally Friday. "That rally wasn't justified and that could be an explanation for some weakness at start of the day and also when the Americans come in later," said Torbjorn Kjus, oil markets analyst at DnB NOR. At 1012 GMT, the front-month May Brent contract on London's ICE futures exchange was 8 cents, or 0.1%, lower at $125.05 a barrel. The front-month May contract on the New York Mercantile Exchange was trading down 43 cents, or 0.4%, at $106.44 a barrel. Analysts said the market could have lost some of its recent steam, thanks to significant efforts by producing and consuming countries to manage the oil price. Last week's comments from the world's largest oil exporter, Saudi Arabia, that supplies are plentiful and the futures market overpriced put significant pressure on prices. Reports that some consuming countries are considering the possibility of an emergency stock release also saw prices fall. In a sign some of the bullish feeling has gone from the market, money managers--including hedge funds--cut their net long position in Nymex crude by 4% last week, according to data from the Commodity and Futures Trading Commission. The net-long position is the difference between the number of long positions, or bets that prices will rise, and short positions, or bets that prices will fall. Intercontinental Exchange Inc., or ICE, will release its own set of data on money managers' positions later Monday. Commerzbank said it would come as "no surprise" if speculative net long positions in Brent have also been cut. Signs that the relationship between Sudan and South Sudan may be thawing somewhat could also remove some of the risk premium from the market. Pagan Amum, the South's chief negotiator, said Monday that he is "optimistic" the two countries will reach a deal this month that could see South Sudan's oil start to flow again. South Sudan shut down its oil production in January due to a dispute with Sudan over pipeline transit fees. The shut down has deprived the market of around 350,000 barrels of oil a day and helped push oil prices higher. "If the country does restart its production facilities by early April, we expect it to reach full capacity by end-May," said JBC Energy in a note. This would help ease concerns over supply and take some of the risk premium out of prices, analysts said. Still Iran remains a major question mark for oil market observers and newsflow on the relationship between the west and the Islamic Republic is likely to continue to have a significant affect on the market, analysts said. "That is the big wild card: how much Iranian exports will be lost," DnB NOR's Kjus said. At 1012 GMT, the ICE's gasoil contract for April delivery was down $3.00, or 0.3%, at $1,026.00 a metric ton, while Nymex gasoline for April delivery was 16 points, or 0.1%, higher at $3.3868 a gallon. -By Sarah Kent, Dow Jones Newswires; 4420-7842-9376; sarah.kent@dowjones.com

Source