Crude futures prices fell slightly on Friday, capping off a 5 percent decline from a week ago, as worries about low winter fuel inventories dissipate amid rising oil supplies.
Light, sweet crude for December declined US$0.10 to US$47.32 per barrel on the New York Mercantile Exchange, settling nearly US$8 below the late October peak of US$55.17. December Brent crude traded at US$42.31, down US$0.71 on the International Petroleum Exchange in London.
A research note by Credit Suisse First Boston said the downtrend in oil prices had reasserted itself after the markets rose Wednesday following the US government's latest petroleum supply report. That report showed the supply of distillate fuel, which includes heating oil, shrank for the eighth consecutive week -- a disappointment to many traders who had been expecting a break in the trend.
By Thursday, though, confidence that the refining industry would produce enough heating oil before winter reemerged, sending prices US$1.44 per barrel lower and reversing all but a nickel of Wednesday's gain.
"The US$55 per barrel prices seen in October were never warranted by the market fundamentals, and with no new supply threats appearing the market could not sustain the rally," the London-based World Markets Research Center said. "However, prices are unlikely to slide below US$45 in the immediate future, given the still precarious distillate situation in the US and the upcoming Nigerian general strike."
Wednesday's US Energy Department report showed commercially available supplies of distillates dipped by 100,000 barrels last week to 115.6 million barrels, or 13 percent below year ago levels.
Heating oil for December was unchanged at US$1.3636 per gallon on Nymex, where gasoline futures rose US$0.12 to US$1.2569 per gallon. Natural gas futures settled at US$7.16 per 1,000 cubic meters, a decline of US$0.76.
Markets have been tense for months due to the world's limited excess production capacity, now only around 1 percent above the daily consumption of 82.4 million barrels, leaving little room to maneuver in the event of a production outage. Such a disruption could come next week as Nigerian unions vowed to defy a court order blocking a strike set for Nov. 16. Nigeria produces 2.5 million barrels a day and is the world's seventh-largest exporter.