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Oil prices slide in profit taking from record peaks
AFP
NEW YORK
Petroleumworld.com 09 26 07
World oil prices tumbled Tuesday in profit taking for a second straight day after last week's record-setting rally.
New York's main futures contract, light sweet crude for delivery in November, dropped 1.42 dollars to close at 79.53 dollars per barrel.
In London, the price of Brent North Sea crude for November delivery shed 1.29 dollars to settle at 77.62 dollars per barrel.
The two benchmark futures contracts struck new record peaks last week: New York at 84.10 dollars per barrel and Brent at 79.94 dollars.
World crude futures finished lower on Monday and extended losses Tuesday as more production came online in the Gulf of Mexico after being shuttered in anticipation of storms."After yesterday's sell-off it appears that the delayed seasonal top might start to finally be in place," said Phil Flynn of Alaron Trading.
Global Insight analyst Simon Wardell said the sell-off was "a reaction to the Gulf of Mexico situation coming back to normal, and to quite how high prices went last week."
He added that prices had not deserved to reach record highs last week amid the current supply-and-demand situation.
Helen Henton, head of commodities research at Standard Chartered, said the crude oil market "is currently adequately supplied."
" US inventories may be falling but they are falling from very high levels and are a consequence of improving refinery run rates," she said. "Potential shut-ins in the Gulf of Mexico owing to hurricane activity remain a threat to supply, but the reality is that these tend to be short-lived."
For John Kilduff, an analyst at MF Global, the bearish sentiment appears set to prevail.
" With the market showing signs of technical exhaustion, multiple events of fundamental import like weather or political strife that produce actual supply disruptions will be required to get the market moving steadily to the upside again.
For now, a considerable shakeout looks likely to play out," Kilduff said.
Meanwhile, traders awaited the US Department of Energy's weekly snapshot on American energy stockpiles, due Wednesday.
Last week's report showed US crude inventories had plunged by 3.8 million barrels in the week ended September 14. That marked the 10th consecutive weekly drop and the decline was almost double market expectations.
Henton noted that US gasoline demand has been persistently strong, despite high prices, while China's import demand continues apace.
" We believe oil prices are now too high and not reflecting the fundamentals of the market," Henton continued.
" Once the US hurricane season has passed and OPEC's production increase becomes a reality, we expect prices to move lower, settling in the 65-70 dollar range."
However, a top official with the International Energy Agency (IEA) warned Monday that short- and medium-term oil prices would likely remain high, citing demand-supply tensions and robust growth in China and India.
AFP 25 1935 GMT 09 07
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