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Oil prices ease in Asia after striking fresh record peaks
AFP
SINGAPORE
Petroleumworld.com 09 14 07
Crude oil prices pulled back below 80 dollars a barrel in Asian trade Friday on profit taking after striking fresh record peaks overnight due to a hurricane in the United States, dealers said.
At 3:20 pm (0720 GMT) New York's main contract, light sweet crude for October delivery, dropped 42 cents to 79.67 US dollars a barrel from its record close of 80.09 dollars in late US trades Thursday.
The October contract hit a new intraday high of 80.20 dollars Thursday, two cents higher than Wednesday's record, as Hurricane Humberto battered Texas and dragged on across Louisiana as a tropical storm.
Oil prices surged in US trades on fears the storm could damage oil production facilities in the US Gulf Coast.
Brent North Sea crude for October delivery fell 17 cents to 76.95 dollars.
Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz, said crude oil prices hit new record peaks after the storm cut off power supplies to a number of refineries in the US Gulf of Mexico region.
But prices retreated after investors judged the damage had been limted, he said.
"The shutdown of the refineries is likely to be very temporary and inevitably there will be profit-taking after the record highs," Shum said.
But he said prices will remain under pressure in the near-term because September is the peak hurricane month in the United States, the world's biggest energy consumer.
Winter in the northern hemisphere is also nearing which means demand for heating fuel would peak.
"In the near term, there are limited downside risks to the oil market," Shum said.
"Hurricane Humberto is a reminder that we are in the peak hurricane month, and if we look ahead into the coming winter months, petroleum demand also typically peaks," he said.
"So oil supply and demand fundamentals are likely to remain tight, and these strong fundamentals have attracted investors back into the oil market."
Shum said concerns over the fallout from the crisis in the US subprime credit market appeared to have dissipated, and US President George W. Bush's announcement of a partial US troop pullout from Iraq would have limited impact in the short term.
"I think the longer term question is in the aftermath of an actual troop withdrawal. Are we going to see a resurgence of violence in Iraq which may lead to bigger concerns?" he said.
AFP 14 0756 GMT 09 07
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