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Oil Prices Slip After Hitting Record

Posted on: Thursday, 6 July 2006, 09:02 CDT

By GILLIAN WONG

SINGAPORE - Crude oil prices dipped Thursday after hitting a record in the previous session on supply concerns prompted by interruptions in oil shipping and refining along the U.S. Gulf Coast, coupled with rising gasoline demand.

Analysts said the oil market was correcting because Wednesday's jump was partly driven by investors reacting to North Korea's defiant test-firing of seven missiles.

Traders said Pyongyang's tests added uncertainties about the global political situation to a market already jittery over issues affecting major oil producers such as Iran's standoff with the international community over its nuclear program and violence in Nigeria and Iraq.

"The surge yesterday to a record high was really due to bullish elements seeking any excuse to make a run at prices," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.

"The North Korean situation was cited by many traders as a reason to drive up prices, but it really has no immediate impact on crude oil supply and demand as it's not a producer nor a major consumer of oil products," he said.

Light, sweet crude for August delivery fell 13 cents to $75.06 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract hit an intraday record of $75.40 a barrel before easing back to settle at $75.19, an increase of $1.26.

The previous intraday record for front-month oil futures was $75.35, set on April 21.

August Brent crude on London's ICE futures slid 7 cents to $73.91 a barrel.

Gasoline futures dropped 1.20 cents to $2.2680 a gallon while heating oil prices slipped 0.46 cent to $2.0580 a gallon. Natural gas futures fell a cent to $5.755 per 1,000 cubic feet.

North Korea defied stern warnings from the United States and Japan to launch six missiles early Wednesday, including a long-range Taepodong-2, which failed shortly after takeoff. Later Wednesday, the communist nation fired a seventh missile.

A glitch at a Texas refinery on Monday and recent shipping problems along the Gulf Coast following an oil spill have heightened the market's concern about motor-fuel supplies at a time when demand continues to rise in spite of rising prices.

The Department of Energy is scheduled to release its weekly petroleum report Thursday, a day later than usual due to the Independence Day holiday. With demand about 1 percent above year ago levels for the past month, analysts expect to see commercial inventories of gasoline decline for the second straight week.

Source: Associated Press/AP Online

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