Oil prices dipped slightly Monday, but remained supported by uncertainties over whether U.S. gasoline inventories can meet summer driving demand and by a disruption of oil supplies from Nigeria.
Light, sweet crude for June delivery fell 8 cents to US$62.42 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.
Traders are watching U.S. gasoline inventories, which rose slightly in the week ended May 5 despite glitches at refineries that have reduced supplies for nearly three months.
"Tightness in the U.S. gasoline situation will continue to drive the market, even though inventories are at a comfortable level, because the summer driving season is right around the corner," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "There's not a lot of time for refineries to catch up with demand."
Analysts are concerned that gasoline supplies, though rising, won't meet the peak demand of the U.S. summer driving season, which begins Memorial Day weekend at the end of May. Unplanned outages and scheduled maintenance at refineries, sluggish imports and strong demand have plagued gasoline stocks since early February. At least a dozen additional partial shutdowns have occurred in the U.S. and internationally that cut refining capacity.
Shum said the other factor supporting crude oil futures was the violence in Nigeria that has cut off the supply of more than 800,000 barrels a day.
"It's a real disruption, not just a threat," Shum said. "That situation will continue to drive the crude markets."
Nigeria is one of the world's top 10 oil producers and a main supplier of crude to the United States. The production cuts after a bombing and kidnapping campaign by militants have helped send crude prices higher worldwide.
A Friday report from the International Energy Agency also raised concerns about the market's ability to meet an expected jump worldwide in demand for oil-based products.
The IEA said the Organization of Petroleum Exporting Countries needs to increase output soon, and expressed concern over the ability of refiners and OPEC's willingness to meet an expected jump in oil product demand of 1.6 million barrels a day in June.
In other Nymex trading Monday, heating oil futures were flat at US$1.8815 per gallon, while natural gas prices gained 3.9 cents to US$7.938 per 1,000 cubic feet.
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