Oil prices dip on profit taking, after brief runup above $69 a barrel | SummitDaily.com

Oil prices dip on profit taking, after brief runup above $69 a barrel

NEW YORK ” Oil prices fell Tuesday as traders sold futures contracts following a recent run-up fueled by concerns that Iran’s nuclear standoff and violence in Nigeria could hurt supplies.

After climbing to $69.45 a barrel in overnight electronic trading ” a high for 2006 ” light, sweet crude for May delivery traded at $68.45 by midday on the New York Mercantile Exchange, a decline of 29 cents from Monday’s settlement price.

Oil analyst Timothy Evans of IFR Energy Services said after rallying close to $70 a barrel, there was “risk of exhaustion” in the oil market, not least because U.S. oil inventories are at a seven-year high.

Gasoline futures fell by less than a penny to $2.002 per gallon, though they are still 29 percent higher than a year ago.

The usual pre-summer gasoline supply worries are heightened this year by the prospect of tight supplies of ethanol, which is being blended with gasoline in increasing amounts as refiners phase out their use of additive MTBE, which has been found to contaminate groundwater.

Heating oil prices declined by 2.29 cents to $1.9225 a gallon. Natural-gas futures declined by more than a nickel to $6.83 per 1,000 cubic feet.

In spite of Tuesday’s retreat, oil prices remain 27 percent higher than a year ago, primarily because of geopolitical jitters. But crude futures are still below the record levels reached after Hurricane Katrina hit the Gulf Coast last year. On Aug. 30, front-month crude-oil futures traded as high as $70.85, then settled at $69.81.

Chief among the oil-market fears these days are Iran’s nuclear standoff with the international community and violence in Nigeria that has forced the shutdown of more than half a million barrels a day of supply. Both Iran and Nigeria are members of OPEC.

Another source of concern is that more than 300,000 barrels per day of Gulf of Mexico production remains off the market as a result of last summer’s hurricanes.

The U.N. Security Council has demanded that Iran suspend its uranium enrichment program. But Iran has so far refused, saying the project is for research and not for development of nuclear weapons.

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