Oil Nears $60 As Profit Takers Pull Down Energy Futures

Oil prices tested the $60 level as easing U.S. supply concerns spurred a bout of profit taking.

U.S. crude settled down $1.59 or 2.6% at $60.05, just above the low of $60.00 for the day.

A fall in U.S. gasoline and crude inventories had pushed oil prices over $62.00 on Wednesday.

Despite the draws, analysts said the United States would probably be well stocked ahead of the summer driving season, with crude inventories expected to rebound as fog along the Gulf Coast import center lets up.

U.S. oil gave up 18 cents on Thursday as traders began to take profits from highs struck earlier in the week.

"I think the market is moving on some profit taking," said Eric Wittenauer, Energy Futures Analyst for A.G. Edwards Inc.

Other futures in the energy complex were also down on Friday. Still, RBOB gasoline posted its seventh weekly gain in a row. Since the beginning of the year, RBOB is up 19%.

"The data definitely had a bullish skew, but realizing there was a ship channel closure impacted some of the numbers, its not surprising some would take profits here."

Analysts are also eyeing OPEC's March 15 meeting in Vienna where members of the producer group will discuss output policy and Iran's standoff with the West.

Disruptions to 180,600 barrels per day (bpd) of Australia's oil supplies, about half of national output, by Cyclone George has also supported prices. A second storm is further threatening operations.

"While crude's flat price could remain rangebound in the high $50s to low $60s in the very short-term, our view is that near-term price risk is to the upside. We see good fundamental support for crude in March-April," J.P. Morgan said in a report.

OPEC economists favor keeping output steady for now, an official told Reuters on Thursday after the Economic Commission Board discussed available data. At its previous two meetings in
October and December, OPEC agreed to cut a total of 1.7 million bpd, roughly 6% of production.