Oil prices fell on profit-taking Friday but were expected to hold near record levels as traders kept a watchful eye on a potential tropical storm brewing off the west coast of Florida.
U.S. forecasters warned that a weather system swirling could make landfall as a tropical storm over the weekend. Computer models show possible tracks across Alabama, Mississippi and Louisiana.
"I expect a lot of support for pricing as traders don't want to be caught short ahead of the weekend," said Victor Shum of Purvin & Gertz in Singapore. "And folks will continue to watch how this storm develops over the course of trading."
Light, sweet crude for November delivery lost 25 cents to US$81.53 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.
The October crude contract hit a record high for the fourth straight session before expiring Thursday up US$1.39 at US$83.32 a barrel. It rose as high as US$83.90 in intraday trading.
As a precaution, oil industry workers left five production platforms in the Gulf, and three drilling rigs have been evacuated, according to the U.S. Minerals Management Service. But the evacuations are likely temporary, given that oil and gas platforms are built to withstand smaller storms - even of tropical strength, analysts say.
The temporary closure of about a quarter of the Gulf of Mexico's daily oil production lent an extra boost to the oil market's already strong record-breaking run, because traders view U.S. crude inventories as tight. Last week, crude inventories declined.
But the real drive behind the rally, many analysts say, is an influx of speculative "nontraditional" capital into energy commodities, an inflow that increases when the dollar falls. On Thursday, the dollar fell to yet another record low against the euro, and dropped to the same value as the Canadian dollar for the first time since November 1976. A weak dollar supports oil prices by making futures cheaper for foreign investors.
November Brent crude lost 35 cents to US$78.74 a barrel on the ICE futures exchange in London.
Nymex heating oil futures dropped 0.68 cent to US$2.2541 a gallon (3.8 liters) while gasoline prices fell 0.55 cent to US$2.1296 a gallon.
Natural gas lost 0.9 cents to US$5.999 per 1,000 cubic feet. Natural gas prices have not been affected by National Hurricane Center forecasts that a tropical depression or storm could soon form in the Gulf, where there is a concentration of natural gas infrastructure.