LONDON, Sept 27: Oil prices dipped on Tuesday on profit-taking on the eve of the weekly snapshot of US crude inventories, and as Saudi Arabia pledged that it would supply the market with adequate oil to meet demand.
However, prices remained in sight of 66 dollars per barrel on worries that US refineries, battered by hurricanes Rita and Katrina, could struggle to meet demand in the run-up to the northern hemisphere winter.
New York’s main contract, light sweet crude for delivery in November, lost 42 cents to $65.40 per barrel in early trading. It gained $1.63 on Monday.
In London on Tuesday, the price of Brent North Sea crude for November delivery shed 43 cents to $63.50 per barrel. The contract won $1.49 the previous day.
“It is profit-taking after Monday’s rally,” the Energy Information Centre’s Veronica Smart said. “Prices (are) also easing ahead of the inventory data tomorrow. We’re likely to see some builds and so we could see some more weakening in prices.”
The US Department of Energy was to publish on Wednesday its report on energy stockpiles for the week to September 23.
Crude futures spiked on Monday on fears that already-stretched US refineries would find it difficult to produce enough heating oil for the world’s biggest energy consumer in time for the fourth quarter.
The scale of the problem was underlined by US government figures showing that crude production in the Gulf of Mexico remained completely shut down following Hurricane Rita, while more than 78 per cent of natural gas output was offline.
The area worst hit was Port Arthur, Texas, where two refineries belonging to Royal Dutch Shell and Valero could remain closed for at least one month.
Sucden analyst Sam Tilley said: “The market is concerned that the shut-in of the refinery capacity will lead to draws in heating oil stocks ahead of the peak demand winter period when stocks should be rising.”
