PETALING JAYA: Crude oil fell short of a fresh record high on the New York Mercantile Exchange (Nymex) yesterday as prices succumbed to light profit-taking amid concerns over the US weekly inventory data.
The light sweet crude September delivery eased 14 cents to US$78.07 a barrel from Tuesday, which saw the contract closing at US$78.21 – the highest closing price on record.
After seven consecutive weeks of gains, US crude oil tested last year's all-time intra-day high of US$78.40 a barrel, fuelled by fears that the Organisation of Petroleum Exporting Countries' (OPEC) reluctance to lift production will lead to a sharp pre-winter decline in supplies.
“Oil is strong technically,” Makoto Takeda of Tokyo Bansei Securities was quoted by Reuters as saying yesterday.
“After today's data, the market is likely at first to rise further, but a pull back is likely later. I think there's a risk that the fresh buying is running dry”.
Nymex crude oil speculators are believed to have pared their record high net long positions for two weeks in a row, showing a reluctance to extend bullish bets on the market.
But oil has continued to rise, despite a bout of risk aversion that has hit equity markets amid escalating sub-prime lending woes in the US, fuelled partly by OPEC's resistance raising production.
OPEC, which is set to meet next month to discuss a pre-winter policy, said recently it saw no need to unwind the two production cuts it agreed in late-2006 as long as inventories were high.
Meanwhile, Brent crude oil in London fell 35 cents to US$76.70 per barrel, spurred by a steady decline in stocks at the Cushing, Oklahoma – the delivery point for the Nymex contract.
According to an expanded Reuters' poll of analysts, nationwide crude oil stocks were expected to have fallen by 700,000 barrels last week, the fourth consecutive decline as refiners boosted operating rates.
With part of the market's latest rally attributed to a fresh infusion of short-term speculative funds, some analysts said a correction could be in store after new highs are set.