Sun, Mar 12, 2006 - Page 10 News List

Oil drops below US$60 despite political worries

AP , NEW YORK

Crude oil prices slipped below US$60 a barrel on Friday as traders took profits ahead of the weekend, but worries about violence in Nigeria and the possibility of UN sanctions against Iran still underpinned the market.

Light, sweet crude for April delivery fell US$0.51 to settle at US$59.96 a barrel on the New York Mercantile Exchange -- its lowest settlement price since Feb. 17, when the contract settled at US$59.88. Crude futures have fallen nearly 6 percent this week from last Friday's settlement price of US$63.67. Brent crude futures on London's ICE Futures exchange dropped US$0.23 to US$60.83 a barrel.

Gasoline fell US$0.032 to settle at US$1.6881 a gallon (US$0.4459 a liter) on Friday, a day after gaining almost US$0.07. Heating oil fell US$0.0354 to settle at US$1.6846 a gallon (US$0.4450 a liter), while natural gas rose US$0.045 to settle at US$6.646 per 1,000 cubic feet (US$0.2347 per cubic meter).

"We're seeing a lot of profit-taking in products -- heating oil and gasoline -- ahead of the weekend," Alaron Corp analyst Phil Flynn said.

Gasoline futures had rallied on Thursday on expectations that inventories would be drawn down as refineries in the US reduce output while undergoing spring maintenance.

The US Energy Information Administration said on Wednesday that commercial gasoline stocks fell 1.1 million barrels to 224.8 million barrels last week as refiners lowered utilization by 2.2 percentage points to a relatively low 83 percent of operating capacity.

Gasoline futures have seen especially big swings this season, as many states are banning the gasoline additive MTBE, a ground pollutant, and gasoline contracts will eventually have to phase it out.

"This is going to be the most confusing rollover in the history of the gas market," Flynn said.

Still, oil markets are on edge over militant attacks on oil facilities from the Middle East to Nigeria and the confrontation over Iran's nuclear program.

"I believe the market is a lot closer to a bottom than to a top," Flynn said. "I doubt you'll see the market fall too far."

Kuwaiti oil minister Sheik Ahmed Fahd Al Ahmed Al Sabah has said he believes political turmoil and extremism have added US$5 to US$8 to the price of a barrel of oil.

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