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Singapore - Oil extended losses by another half a dollar yesterday as dealers took more profits from last week's record high after a mild storm left US Gulf oil infrastructure undamaged, allowing producers to resume pumping.
US crude fell US63c to US$80.32 a barrel, adding to Monday's US67c loss to bring it nearly US$4 below the record US$83.90 set by the October-month contract last Thursday.
Crude oil production in the US Gulf of Mexico rose to 80.7 per cent of capacity on Monday, up from 37 per cent on Friday, according to the US Minerals Management Service, as oil companies redeployed workers to offshore rigs.
"What we saw was a risk premium embedded into crude prices, but now that the storm passed without damaging production facilities we see prices coming down," said Gerard Burg, at National Australia Bank.
"Now that we are out of the key demand season, the end of the driving season in the US, we are seeing less demand in the product sector, refineries are heading into maintenance before ramping up production of heating oil," Burg said.
US refiners probably slowed imports of crude last week, causing inventories to fall by about 2 million barrels, their fifth straight decline, according to a poll of analysts.
Refiners could have curbed imports for economic reasons too, the poll showed, as prices for future crude deliveries are cheaper than the currently traded month, making it good business sense not to store more feedstock than needed.
While some analysts say crude could be ready for a downward correction, they warn that speculative cash or tightening supplies could spur prices higher again.
- Reuters
