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Oil futures droop below US$60 as supply fears ease

Crude oil futures fell below US$60 a barrel yesterday, as supply concerns eased on signs of adequate fuel stocks in the US, the world's largest consumer.

Light, sweet crude for December delivery fell as low as US$59.65 a barrel in Asian electronic trading on the New York Mercantile Exchange before recovering to US$59.90, down US$0.12. In New York trading Thursday, the contract plunged nearly US$2.50 to hit an intraday low of US$59.32 before closing at US$60.02.

The November contract settled US$1.38 lower Thursday to expire at US$61.03 a barrel -- the lowest closing price for a front-month contract since Aug. 3.

December Brent crude futures on London's International Petroleum Exchange fell US$0.23 to US$57.68 a barrel.

Crude's four-day slide reflects diminishing concerns about supply shortages following earlier hurricane damage to oil and gas platforms in the Gulf of Mexico, traders said.

The US government's midweek petroleum inventories report showed domestic crude and gasoline stocks rose.

"The situation has completely changed since the beginning of October," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

Oil prices have declined 16 percent since reaching US$70.85 a barrel on Aug. 30, the day after Hurricane Katrina made landfall.

Emori attributed the US petroleum inventory increases to the release of 60 million barrels of oil equivalent by the International Energy Agency after Katrina devastated Gulf of Mexico oil facilities.

"The release of crude and gas stocks from the IEA provided a good cover against the shortage expected after the hurricanes," Emori said, adding the move has now shown to have helped keep overheated oil prices in check.

The 26-nation IEA comprising mainly industrialized oil-importing countries agreed Thursday to complete the release of emergency oil stocks launched to plug supply shortages after Katrina, but decided against any further measures.

The governing board of the IEA reviewed the global oil supply situation and the stock draw announced last month, and said it remains prepared to take "additional coordinated action" to address future shortages if needed.

Weather forecasts also added relief to prices with continued predictions that Wilma, the latest hurricane to threaten the Gulf coast, will likely avoid key oil facilities. Some analysts estimated crude futures could slip even further as traders waited for price direction.
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