Oil prices showed little movement early yesterday as concerns eased about a supply shortage in the US due to the shutdown of a major pipeline in the state of Alaska.
Light, sweet crude for September delivery was up US$0.02 at US$76.33 a barrel in morning Asian electronic trading on the New York Mercantile Exchange.
US Energy Secretary Samual Bodman said on Tuesday there were adequate supplies to replace oil lost from the shutdown of the BP Exploration Alaska's Prudhoe Bay field.
BP Plc announced late on Sunday it had begun shutting down 400,000 barrels of daily oil production at Prudhoe Bay in Alaska. The price jumped more than US$2 on Monday to settle at US$76.98 a barrel, the highest since July 14, when the settlement was a record US$77.03.
The US Energy Information Administration (EIA), the government's energy statistics arm, said in its short-term energy outlook earlier in the day that it expects Alaskan crude oil production to gradually return to full production before February, based on BP's statement on Monday that recovery would take several months. That would result in the loss of about 50 million barrels of oil over the next six months.
Alaska usually supplies 800,000 barrels of oil a day to the West Coast refineries, or 30 percent of all the oil processed daily in that region, the EIA said in its outlook.
But Bodman said there are adequate supplies to make up for the loss to West Coast refineries. Relatively high inventories of crude oil in the system and oil that can be diverted from other producers, including Saudi Arabia and Mexico, can help meet refinery needs, he said.
"My sense is we're in pretty reasonable shape," Bodman told a news conference.
Despite profit-taking that has held down prices as traders lock in gains and moves to call a cease-fire between Israel and Hezbollah fighters in Lebanon, analysts said prices have the potential to go much higher.
US gasoline stocks were expected to fall for a third straight week in data due yesterday from the EIA. At around 334 million barrels, US crude inventories are at a five-year high, but OPEC's spare capacity is tight -- about 1.1 million to 1.3 million barrels a day, mostly in Saudi Arabia, the EIA said on Tuesday.
Bodman said Saudi Arabian Oil Minister Ali Naimi told him that oil would be made available.