Oil Loses 2% on Profit Taking; Refinery Issues Prop up Gasoline
Crude oil futures fell more than a dollar as traders took profits ahead of fresh oil inventory data due Wednesday and following Monday's sharp price rise on worries about supply disruptions in the wake of Nigeria's disputed presidential election.
On the New York Mercantile Exchange June crude dropped $1.31 or 2% to settle at $64.58, trading from $64.10 to $66.30.
In London, June Brent crude was also down more than $1, well off session highs of $68.55.
"It looks like profit-taking, from my vantage point," said Jim Ritterbusch, president of Ritterbusch & Associates, in Galena, Ill.
"We're seeing retracement of strong gains yesterday," said Antoine Halff, head of energy research at Fimat USA.
Oil jumped on Monday after Nigeria's ruling party's candidate Umaru Yar' Adua was declared the winner of the presidential poll. Observers and opposition groups said the result was manipulated through violence and rigging.
Analysts raised concerns over the potential for more violence against the oil industry, which has already curbed about 20% of the OPEC nation's total output.
"The fear of renewed supply disruption is prompting traders to buy first and ask questions later," said Olivier Jakob of Swiss-based oil consultants Petromatrix.
U.S. prices have been pressured by a glut of crude in the Midwest, creating an unusual discount to Brent oil. A string of refinery problems in the region could lower demand and help
build stocks further
Refinery snags and inventory concerns kept refined products supported.
NYMEX May RBOB gasoline settled up 1.82 cents or 0.8% at $2.2089, trading $2.1689 to $2.2449.
NYMEX May heating oil lost 4.83 cents or 2.6% to settle at $1.8460, trading $1.8391 to $1.8968.
Full production may not resume for months at BP's Whiting, Indiana, refinery, a BP source said today.
Production at the 420,000-barrel-per-day refinery has been cut to around 200,000 bpd due to operational issues, BP said in a statement.
A new snapshot of U.S. inventories will be available Wednesday morning from the U.S. Energy Information Administration's weekly report.
A Reuters analyst poll on Monday yielded a forecast that crude oil supplies dipped 400,000 barrels last week. Gasoline inventories were expected to be down 100,000 barrels and distillate supply up 500,000 barrels.
Refinery capacity use was expected to be up 0.5 percentage point, contributing to the crude supply dip and after having risen 2.0 percentage points in the previous week as refineries
return from seasonal maintenance.