Oil prices down by 19 cents

17-Aug-05

Crude oil prices have slipped by 19 cents in New York on profit-taking, even as concerns lingered over tight supply. Does a drop of 19 cents represent much of a reversal, when oil prices have risen nearly US$10 a barrel over the past three weeks ended Friday? Light, sweet crude-oil contracts for September delivery settled at US$66.08 a barrel Tuesday on the New York Mercantile Exchange. On London's IPE, September Brent crude futures settled down 17 cents at $65.41 The recent spike of US$10 in 3 weeks can be attributed to a confluence of factors including strong demand, tight supplies, increased global tension, hot weather, refinery glitches and excessive speculation. Almost a dozen U.S. refineries, accounting for 16% of the total U.S. refining capacity, reported problems or unplanned shutdowns last week. Wednesday's U.S. inventory report will drive short-term price direction. Gasoline inventories are at their lowest level since November, and are expected to see a drop of up to 2 million barrels in the week ended Aug. 12. Absolute inventory figure are less significant than how long supplies will last as demand continues to increase. Increasing defiance from Iran to resume its uranium enrichment program could lead the Western world to impose sanctions through the United Nations to force a halt in the program. Iran pumps 4 million bpd and is the second-largest producer in OPEC.