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Oil prices steady at USD 68 a barrel in Asia as gasoline supply concerns persist

Oil prices held steady around US$68 a barrel in Asian trading Monday on lingering concerns U.S. gasoline supplies are still not meeting peak summer demand.

Light, sweet crude for July delivery edged down 2 cents to US$67.98 a barrel on the New York Mercantile Exchange midmorning in Singapore. The contract rose 35 cents to settle at US$68 a barrel Friday, its highest close since September.

Analysts said traders continue to react to last week's report by the U.S. Energy Department's Energy Information Administration.

The report showed gasoline inventories were unchanged at 201.5 million barrels for the week ended June 8. Analysts surveyed by Dow Jones Newswires had expected inventories to rise by 2 million barrels.

"There's still the ongoing problems with getting enough gasoline ready," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Last week's report showed that U.S. refinery utilization, which had been expected to grow by 0.8 percentage points, fell 0.4 points to 89.2 percent in the week ended June 8, the second straight weekly decline. Most analysts say refineries should be using 94 percent to 95 percent of their capacity at this time of year.

The report killed any sentiment that the U.S. refining industry, beset by an unusual number of outages this spring, has recovered.

Unrest in Nigeria has also kept oil prices supported. Friday, gunmen seized five foreign hostages in two separate incidents in the vast wetlands region where the crude is pumped.

After 18 months of rising violence that has slashed output by about one quarter in Africa's biggest oil producer, about a dozen foreigners remain in captivity in the region.

A call by a top militant leader for the kidnappings to stop was largely ignored by the market. The leader returned to Nigeria's oil heartland Saturday after a year and a half in prison.

Also on Nymex, heating oil futures were unchanged at US$2.0106 a gallon (3.8 liters). Natural gas prices fell 2.2 cents to US$7.896 per 1,000 cubic feet.

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