Oil prices fall below US$88 a barrel in Asian trading

SINGAPORE (AP) - Oil prices dropped in Asian trading Monday, extending a retreat from last week's record above US$90 a barrel as investors sold to lock in profits before the contract expires later in the day. 

Light, sweet crude for November delivery lost 86 cents to US$87.74 a barrel in electronic trading on the New York Mercantile Exchange, midmorning in Singapore. 

The contract fell 87 cents to settle at US$88.60 a barrel Friday, after rising as high as US$90.07 in earlier electronic trade. December Nymex crude declined 75 cents to US$87.85 a barrel. 

Still, many analysts expect the declines to be temporary and believe oil futures will continue their assault on price records in the days ahead. 

They say prices are being driven by a weak dollar, speculative investing and low supplies at a key oil terminal in the U.S. Midwest. 

Crude prices have jumped 28 percent since late August despite a growing consensus among analysts that oil's underlying supply and demand fundamentals do not support such high prices. 

While organizations such as the International Energy Agency and the Organization of Petroleum Exporting Countries warn that demand for oil will increase in the fourth quarter, many observers think the demand forecasts are overstated.  

Demand for gasoline is actually falling, the Energy Department says. Domestic oil inventories are at high levels by historic standards, and grew in the week ended Oct. 12. 

Oil inventories at the Nymex delivery point of Cushing, Okla., though, fell that week even as the overall supplies grew.  

And falling Cushing supplies feed a perception that, while overall oil supplies might be sound, it is harder to secure oil in the short term. 

Investors have been drawn to energy futures as a hedge against the weakening U.S. dollar.  

The falling dollar has also made dollar-denominated oil futures less expensive in some other currencies, and speculators have been lured to the crude market by profits that can be made arbitraging various oil contracts, experts say. 

Worries over tensions between Turkey and Kurdish rebels in northern Iraq were also a factor in lifting crude oil prices to last week's record.  

On Sunday, Turkish artillery units shelled Kurdish rebel positions along the rugged Turkish-Iraqi border in retaliation for a rebel attack that killed at least 12 soldiers. 

In London, December Brent crude dropped 77 cents to US$83.02 a barrel on the ICE futures exchange. 

Nymex heating oil futures fell 1.36 cents to US$2.317 a gallon (3.8 liters) while gasoline prices declined 1.62 cents to US$2.1525 a gallon. 

Natural gas futures fell 1.7 cents to US$7.053 per 1,000 cubic feet. 

Latest business news from AP-Wire

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Next In Business News

Offshore holdings of China govt bonds hit a record US$337b in July
July palm oil output seen lower at 1.5m tonnes
MMC Corp back in focus after recent privatisation plan
Ringgit falls as daily Covid cases hit new record
Quick take: Asia Media falls 10% on auditors' disclaimer of opinion
Hong Leong Bank, PChem underpin KLCI mild rebound
RHB maintains 'buy' on Magnum
Quick take: DNeX rises in active trade
Trading ideas: DNeX, Solarvest, Impiana Hotels, Lay Hong, Asia Media
F&N to see year-end boost from vaccination rate

Stories You'll Enjoy