The New York Times: Oil Prices Slip Below $82 a Barrel

By THE ASSOCIATED PRESS
Published: September 20, 2007
Filed at 12:45 a.m. ET

SINGAPORE (AP) — Oil prices dipped on profit-taking Thursday after reaching record highs in the previous session on U.S. refinery outages and declines in U.S. oil inventories.

The decline was limited by worries over a potential tropical storm threat to oil and gas installations in the Gulf of Mexico, analysts said.

A weather system with the potential to become a tropical storm appeared to be heading toward the U.S. state of Louisiana, prompting emergency officials to be on guard Wednesday. Shell Oil Co. announced evacuation plans for hundreds of staff from its rigs in the region.

”The threat of a storm ahead of the weekend will likely keep oil prices on the boil,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. ”Nobody wants to be caught short ahead of the weekend in case a storm turns into a major hurricane that causes damage in the U.S. Gulf of Mexico.”

The U.S. National Weather Service said the low-pressure area could affect southeast Louisiana and south Mississippi Friday night or Saturday and that it would have the potential to become a subtropical or tropical storm.

Light, sweet crude for October delivery lost 9 cents to $81.84 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.

The contract Wednesday rose 42 cents to settle at a record $81.93 a barrel after jumping to a new intraday high of $82.51 a barrel.

”Oil pricing has increased about 20 percent in the last 18 trading days or so and such a sharp surge in pricing is bound to result in some profit taking and that will provide some prompt relief to oil markets,” Shum said.

Shum said prices remained well supported by tight supplies, highlighted in a U.S. Energy Department report Wednesday of a larger than expected drawdown in crude inventories last week.

Crude inventories fell by 3.8 million barrels during the week ended Sept. 14, said the Energy Information Administration, the department’s statistical arm. This was more than double the 1.5 million barrel decline analysts surveyed by Dow Jones Newswires had expected. However, crude inventories remain at the upper end of their average range for this time of year, the EIA said.

Refinery utilization fell by 0.9 percentage point to 89.6 percent of capacity. Analysts expected a decline of 0.5 percentage point. However, gasoline supplies rose by 400,000 barrels, the EIA said, countering analyst predictions of a 1.3 million barrel decline.

The EIA also reported that distillate inventories, which include heating oil and diesel fuel, rose by 1.5 million barrels last week, more than the 1.1 million analysts expected.

Dow Jones Newswires reported that ExxonMobil Corp. shut down a crude processing unit at its 348,000-barrel-a-day refinery in Beaumont, Texas, and that a piece of gasoline-making equipment at Chevron’s 266,000-barrel-a-day refinery in El Segundo, Calif., had been shut down. The impact on production was unclear.

In London, October Brent crude fell 27 cents to $78.20 a barrel on the ICE futures exchange.

Nymex heating oil futures fell 0.48 cent to $2.2405 a gallon while gasoline prices gained 0.17 cent to $2.0951 a gallon. Natural gas prices declined 9.2 cents to $6.088 per 1,000 cubic feet.

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