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Oil Falls Fifth Straight Day to Finish Below $62

Reuters
Friday, 4 May 2007 | 4:16 PM ET

U.S. crude oil futures ended lower for the fifth session in a row on Friday, slumping on pre-weekend profit-taking and book-squaring.

Gasoline futures also took losses to a fifth day, after failing to follow through on an earlier run-up, with no fresh news of any refinery troubles recently.

Early in trading, crude and gasoline futures were up amid continued concern over refinery snags and dwindling gasoline supply.

News of Nigerian crude oil production problems after kidnapping incidents this week in the OPEC member state had supported both NYMEX and ICE Brent crude futures.

Traders said crude futures had been overbought lately and that the market was trying to set a bottom from which a return to higher ground could be staged.

"The market is trying to find a bottom here...crude has been overbought and is correcting lower," said Mark Waggoner, president of Excel Futures in Huntington Beach, California.

"I think this will turn into a buying opportunity as you will see refinery runs pick up in the coming weeks, and that will start creating draws for crude," he said.

"Demand for gasoline is starting to pick up and you will see it pick up more pace just before the start of the summer driving season" which starts in the last week of May, he added.

On the New York Mercantile Exchange, June crude settled $1.26 lower or 2% at $61.93 a barrel, trading between $61.56 to $63.44 . The day's low was the lowest since hitting $61.34 on April 19. In five days, June crude has fallen $4.53 or 6.8%.

In London, June Brent crude settled 76 cents lower or 1.1% at $65.31, moving from $64.97 to $66.82 .

NYMEX June RBOB gasoline slid 3.12 cents or 1.4% to end at $2.2164 a gallon, trading $2.1970 to $2.2905. For the week, the contract dropped 14.49 cents or 6.1%.

"Gasoline failed to sustain an early push higher here and with no news of fresh refinery outages, maybe people just started to sell or square books ahead of the weekend," said Tim Evans, analyst at Citigroup Global Markets.

NYMEX June heating oil fell 1.44 cents or 0.8%, finishing at $1.8309 a gallon, after trading $1.8162 to $1.8721. From a week ago, the contract was down 8.26 cents or 4.3%.

Evans and other analysts said there were no fundamental or geopolitical headlines pulling down energy futures.

However, some of them cited news of a meeting by senior U.S. and Iranian officials at a crucial international conference on Iraq on Friday at Sham el-Sheikh in Egypt, which seemed to point to a small step towards easing tensions between the U.S. and Iran.

The U.S. ambassador to Iraq, Ryan Crocker, had played down the meeting, saying he had spent just three minutes discussing Iraq with Iranian Deputy Foreign Minister Abbas Araghchi.

In earlier news, Nigeria's 50,000-bpd Okono/Okpoho offshore oil field has shut off production and suspended exports after eight foreign workers were briefly abducted on Thursday, industry sources said on Friday.

Saipem and SBM Offshore, the field operators, declared force majeure, affecting one tanker that was due to berth on Friday, GAC shipping agents said in a daily note.

The latest attack took the total crude oil production halted by militant violence in Nigeria to about 665,000 bpd.

News that Royal Dutch Shell was preparing to restart operations in June at its 380,000-bpd Forcados oil fields in Nigeria, which had been shut for more than a year due to security concerns, helped pressure crude futures on Thursday, traders said.

Saudi Arabia cut first-quarter oil exports to its three key buyers by 11% from a year ago, government data from China, Japan and South Korea showed.

Saudi crude exports to the three nations, which together absorb about a third of the kingdom's oil fell, fell to 2.281 million bpd during the first quarter, down almost 284,000 bpd from a year ago, according to the data.

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