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Oil Prices Slide Below $67 Per Barrel

Posted on: Wednesday, 25 January 2006, 06:00 CST

By GILLIAN WONG

SINGAPORE - Crude-oil futures fell below $67 a barrel Wednesday on mild winter weather in the U.S. and expectations of rising fuel inventories there, although militant attacks in Nigeria and Iran's nuclear standoff with the West remained supply threats.

Light, sweet crude for March delivery fell 50 cents to $66.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract had fallen $1.04 Tuesday to settle at $67.06 a barrel.

At London's ICE Futures exchange, March Brent lost 46 cents to $64.88 a barrel.

Heating oil declined more than a cent to $1.8050 a gallon, while gasoline lost almost 2 cents to $1.7255 a gallon. Nymex natural gas gained 2 cents to $8.705 per 1,000 cubic feet.

"It appears traders are preparing for what could be a bearish Department of Energy weekly supply report," Phil Flynn of Alaron Trading Corp. said in a research note.

The U.S. weekly petroleum supply snapshot to be released Wednesday is expected to show across-the-board increases in crude and refined product stocks, building further above-average levels, according to a Dow Jones Newswires survey of energy analysts.

But analysts said fears of potential supply disruptions from major oil producer Iran and more attacks in Nigeria, Africa's largest oil exporter, would keep a firm floor under prices.

Officials of the Italian oil company Eni SPA said an armed assault on its offices in Nigeria left nine people dead Tuesday.

The attack was the latest in a recent rash of violence across the Niger delta, where four foreign oil workers also are being held hostage and nearly two dozen people have been killed.

"Concerns of possible economic sanctions against OPEC's second largest oil producer Iran, destabilization of the fragile peace in Middle East in the wake of Israeli President Sharon's recent demise and continued terrorist activity in Nigeria have all served to raise concerns over stability of OPEC production," Merrill Lynch analysts said in a research note.

"Risks to oil price will continue to remain on the upside, with prices unlikely to fall materially until these factors have been resolved," the note said.

Source: Associated Press/AP Online

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