Oil retreated on Friday after surging more than $3 in the past three days on concerns over gasoline supply in the United States ahead of the driving season and after new threats against foreign workers in Nigeria.
US light crude fell 47 cents to $72.85 a barrel by 0803 GMT on profit-taking following news that three employees of Italian oil contractor Saipem, taken hostage in Nigeria the previous day, were released early on Friday.
London Brent crude lost 41 cents to $73.02 a barrel, after climbing more than $1 on Thursday.
Crude oil's jump is part of a wider rally in commodities as investment funds pile into the once-disparate group of markets. Copper inched lower on Friday after the previous day's record-highs, while gold drifted down after hitting a 26-year peak on Thursday.
While some industry analysts were dubious about the extent and sustainability of the surge on the metals markets over a short period, others believe that the strength of the oil sector will be supported by strong fundamentals.
"The picture on the energy market is more reliable in the long run as we have seen production capacity of about 1 million barrels offline... which will keep prices elevated," said Andrew Harrington, resources analyst from ANZ Bank in Melbourne.
Oil prices are more than 3 percent below last month's record-high of $75.35 on supply losses in Nigeria, continued undersupply from Iraq and tension over Iran's nuclear work.
Outages at US oil refineries, including the closure of a unit at Valero Energy Corp's Texas City 243,000 barrel-per-day (bpd) plant, outweighed US government data on Wednesday showing gasoline stocks rose for a second-straight week.
But Chevron Corp has returned a crude unit to production on Thursday at its 243,000-bpd refinery in Richmond, California, after a one-day shutdown due to an electrical hitch, sources familiar with plant operations said.
Harrington said the market was quick to react to any refinery supply problems and would remain on edge as weather forecasters warn of another rough Atlantic hurricane season in 2006, which is just three weeks away. A refusal by the US Environmental Protection Agency (EPA) to grant the state of Texas a clean gasoline waiver, even though the state has seen some fuel supply problems as refiners switch to ethanol when making gasoline, also stirred concern.
While Texas has only inquired about a waiver and has not formally asked the EPA for one, several other states have done so to help overcome any gasoline shortages.
Despite the release of the three foreign oil workers in the oil capital Port Harcourt, the kidnapping reinforced fears about the stability of flows from Nigeria as it came a day after a US oil executive was shot dead in the same city.
Rebel attacks have shut in almost a quarter of output in the world's eighth-largest exporter.
As Washington insists it will not hold direct talks with Iran and that sanctions must be part of the incentive-and-penalty offer being drafted by major powers to curb its nuclear plans, President Mahmoud Ahmadinejad said in Jakarta that Tehran's stand-of with the West is "psychological propaganda".
The Iranian leader dismissed the chances of a military action against his country as unlikely.
Comments
Comments are closed.