Oil prices eased on Thursday as dealers locked in profits from a 2.5 percent rally in the previous session that was driven by concerns over tight US gasoline supplies. The planned restart of a key North Sea natural gas pipeline later this week also pressured world crude prices because it was expected to allow a cluster of oil and gas fields along the line to resume output.
US crude settled down 15 cents at $73.36 a barrel, having jumped $1.78 on Wednesday to its highest settlement in over three weeks. London Brent fell 23 cents to $71.90 a barrel. BP said it expects to begin a controlled restart of the CATS North Sea gas system later this week and normal throughput should resume by mid-September. The pipeline was shut on July 1 for repairs after a large vessel dragged its anchor over it.
Global oil prices surged Wednesday after a US government report showed an unexpectedly steep drop in crude oil and gasoline stocks in the week to August 24, due in part to import delays after a hurricane and refinery troubles.
US crude stocks remain 10 percent above the five-year average for this time of year but some analysts forecast supply could struggle to keep pace with demand unless the Organisation of the Petroleum Exporting Countries raises production.
A Reuters poll of 21 analysts projected world oil demand growth would almost double to 1.41 million barrels per day this year and quicken to 1.56 million bpd in 2008, adding pressure on Opec to boost supply.
US gasoline supplies, meanwhile, are running 8 percent below a year ago and well below the average range for this time of year, according to the report from the Energy Information Administration. Opec officials have said repeatedly the market is well supplied, and put part of the blame for high prices on a lack of fuel supplies from consumer nation refineries.
The group, which agreed last year to cut 1.7 million barrels per day from the market, will meet in Vienna September 11 to revisit output policy. An analyst who estimates future shipments from Opec, Roy Mason of Oil Movements, said on Thursday output from the group will jump 580,000 barrels per day (bpd) in the four weeks to September 15, mostly on Western oil demand.
Limiting oil's losses on Thursday, stock markets ticked higher after the head of the US Federal Reserve said the bank was "prepared to act as needed" to ensure credit market problems do not hurt the economy.
"The market will be watching with great interest Fed Chairman Bernanke's speech tomorrow which should shed some light on what the Fed intends to do regarding interest rates on September 18," said Nauman Barakat, senior vice president global energy futures at Macquarie Futures USA Inc.
"I've got to believe that whatever they say will have to be positive for the equity markets and therefore supportive for the energy complex overall." Oil has held up well compared to other commodities, but the US benchmark has fallen from an all-time high of $78.77 on August 1 as some investors worry that a global credit crunch will take its toll on the wider economy and erode oil demand.
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