Oil prices dropped Monday as traders took profits from the rise in crude futures last week on worries about global supplies. Markets were also keeping a close eye on comments from OPEC ministers ahead of a meeting at which they are expected to keep output steady.
Oil prices dropped Monday as traders took profits from the rise in crude futures last week on worries about global supplies. Markets were also keeping a close eye on comments from OPEC ministers ahead of a meeting at which they are expected to keep output steady.
Light, sweet crude for October delivery lost 48 cents to $76.22 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. October Brent crude fell 55 cents to $74.52 a barrel on the ICE Futures exchange in London.
The 12-nation Organization of Petroleum Exporting Countries is almost certain to maintain its current production target, with the U.S. summer driving season over and demand for gasoline and diesel fuel slackening.
Oil officials from Iran, Kuwait and Libya have signaled that OPEC will maintain its official output quota of 25.8 million barrels a day at Tuesday's meeting.
But analysts say the cartel, which produces about 40 percent of the world's oil, could be forced into action if rising crude prices start hurting the global economy. Crude futures hit a record $78.77 a barrel on the New York Mercantile Exchange in early August.
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"There are fairly supportive supply-demand fundamentals going forward ... we therefore have a rather bullish oil environment," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore, adding that part of last week's gains were due to the re-entry of speculators into the oil market.
"With the exception of the uncertain economic outlook due to the subprime mortgage crisis in the U.S., there is really little downside risk to the crude oil futures market."
Some energy investors are worried that credit tightness resulting from problems in the mortgage industry is spreading to other sectors, which could curb demand for oil and gasoline.
Oil prices were supported by last week's inventory report from the U.S. Energy Department, showing that supplies of both crude oil and gasoline fell in the week ended Aug. 31. But analysts also cited the diminished threat that hurricanes would disrupt production in the Gulf of Mexico and surrounding areas as a factor which could pressure prices lower.
Heating oil futures dropped 0.98 cent to $2.1334 a gallon (3.8 liters) on the Nymex, while gasoline prices declined 2.39 cents to $1.9625 a gallon. Natural gas futures dropped 20.1 cents to $5.300 per 1,000 cubic feet.
