Oil Prices Fall Below $66 a Barrel

SINGAPORE – Crude oil futures fell below $66 a barrel in Asian trading Wednesday as some traders took profits after prices surged the previous day on supply concerns.

Light, sweet crude for May delivery dropped 25 cents to $65.82 a barrel in electronic trading on the New York Mercantile Exchange. The contract on Tuesday jumped $1.91 to settle at $66.07 a barrel.

May Brent crude futures on London’s ICE Futures exchange fell 15 cents to $64.82 a barrel.

Traders appeared to be selling contracts to lock in profits after Wednesday’s surge, which was sparked by concerns that oil supplies would be strained during the upcoming U.S. summer driving season, when gasoline demand peaks.

"The market’s been driven up on the concern that gasoline supply could fall leading to the heavy demand period of the summer driving season," said Mark Pervan, commodities analyst at Daiwa Securities in Melbourne, Australia.

"But since U.S. gasoline supply is actually ample, I’m not surprised there’s been a bit of profit taking today," he said.

Gasoline prices rose 0.30 cent to $1.8875 a gallon while heating oil futures rose marginally to $1.8280 a gallon. Natural gas futures advanced 11.6 cents to $7.330 per 1,000 cubic feet.

Some analysts believe gasoline prices in the United States could climb as high as $3 a gallon this summer, though that assumes some significant disruptions at refineries or difficulty in getting fuel to markets. The average U.S. pump price is currently $2.50.

U.S. government data showed consumption was up 1.6 percent over the past four weeks compared with the same period a year ago.

Concerns about oil supplies from Nigeria and Iran, however, were expected to limit any price decline.

The outlook on Nigerian oil output remained uncertain. Royal Dutch Shell, the largest foreign oil company operating in the country, has shut in nearly half of its Nigerian production and says it won’t resume operations until the country is safe enough for its workers.

Iran, the No. 2 oil producer in OPEC, also remains a potential source of concern. It has been referred to the U.N. Security Council over fears it may want to misuse its nuclear program to make weapons, but the council has been at loggerheads over U.S.-led efforts to ratchet up the pressure on Tehran.