Sun, Oct 07, 2007 - Page 10 News List

Supply concerns limit fall in oil prices

AFP , NEW YORK

Oooguruk Island, a manmade island built by Pioneer Natural Resources, sits off the coast of Alaska's North Slope last Wednesday. The company built the 2.4-hectare island to enable it to drill for oil in the Arctic Ocean.

PHOTO: AP

World oil prices fell on profit-taking on Friday but held near recent historic highs on lingering concerns over tight energy supplies ahead of the northern hemisphere winter.

New York's main oil futures contract, light sweet crude for delivery in November, shed US$0.22 to close at US$81.22 per barrel.

In London, the price of Brent North Sea crude for November delivery eased US$0.07 to settle at US$78.90 per barrel.

Crude futures had closed up almost US$2 on Thursday.

MF Global analyst Ed Meir said traders would be looking to push prices lower over the next few weeks, "especially if the hurricane window starts to wind down."

The seasonal hurricane season last month disrupted output at rigs in the Gulf of Mexico, which in turn hit refinery production.

Despite Friday's falling prices, losses were limited by tight US energy supplies.

"Traders are starting to worry about the heating oil inventory in the US market," said Victor Shum, an analyst with energy consultancy Purvin and Gertz. "In the summer, traders worried about the gasoline level. Now, traders are starting to worry about the heating oil level."

Traders focus on reserves in the US because the country is the world's biggest energy consumer, ahead of China, which is No. 2.

The US Department of Energy's weekly report released on Wednesday showed that stockpiles of distillates, including heating fuel, unexpectedly dropped by 1.2 million barrels to 135.9 million barrels during the week ended Sept. 28.

Industry analysts had forecast a rise of 1.3 million barrels.

Crude oil stocks rose by 1.2 million barrels last week, the department's report showed. Most analysts had expected oil reserves to fall.

"The overall oil market remains fundamentally tight in the fourth quarter," Shum said.

He expected oil prices to stay around the US$80 level.

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