Oil prices slipped Friday as traders took profits after crude futures hit their highest levels since the Iraq on concerns about low US inventories and supply shortfalls from Iraq.
US benchmark crude oil futures traded down US$0.14 at US$32.25 a barrel on Friday afternoon after hitting US$32.85 per barrel, its highest since March 18, two days before the US-led invasion of Iraq.
International benchmark Brent crude on the International Petroleum Exchange in London was down 30 cents, following the move of US benchmark West Texas Intermediate on the New York Mercantile Exchange. Brent had reached US$30.58, close to the post-invasion high.
Analyst Simon-Games Thomas said tight supplies in the US heading into winter demand season and the slow return of Iraqi exports should keep prices simmering for the rest of the year.
"The market continues to show great resilience and this will continue to be the theme for the balance of the year. The major risks continue to lie to the upside," said the Sydney-based independent analyst in a daily briefing.
Prices fell sharply after the start of the war in March, but have since recovered as occupation powers failed to meet expectations in reviving Iraq's oil exports.
Baghdad was able to pump up to 2.8 million barrels per day before the US-led invasion, and has only achieved about half that rate in the past week.
The shortfall has helped keep commercial inventories near record lows in the US, the world's top consumer, and OPEC exporters have been reluctant to free up any extra supply while Iraqi output is rising.
Critics of US oil policy say the government's decision to raise stock levels in the enormous US Strategic Petroleum Reserve has diverted supply away from commercial users.
Latest US government data show commercial stocks of winter heating fuel were far below normal in the key Northeast region. Outside the Northeast, most homes are heated with natural gas and electricity.
OPEC oil ministers agreed only last week to leave supply quotas unchanged despite prices at the top of their target range. Since the agreement, OPEC's reference basket of crude oil has broken the top end of the cartel's US$22 to US$28 per barrel target range, standing at US$29.07 Thursday, a signal that the group may raise quotas.
However, the cartel has been reluctant to raise production in the past when prices stayed over US$28.
OPEC secretary-general Alvaro Silva said markets were already well supplied and external factors such as uncertainty over Iraq were driving the price up.
"It is not worth putting more volume on the market if we know the market is well supplied," he told reporters from OPEC's Vienna headquarters.
Gasoline futures on in New York were down US$0.0105 a gallon, at US$0.953 per gallon. The average US pump price on Friday, for self-serve regular, was US$1.55 a gallon.
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