Oil prices fell slightly Tuesday, but supply worries that boosted oil by $1 a barrel a day earlier kept a floor under selling.
The concerns over supplies came after indications that
OPEC is unlikely to boost production and a report outlining a possible oil crunch in the coming months.
The International Energy Agency raised the prospect of a global oil crunch this year on a recipe of higher-than-expected demand and below-par supply from the Organization of Petroleum Exporting Countries and other producers.
Light, sweet crude for July delivery fell 39 cents to $65.58 a barrel in electronic trading on the New York Mercantile Exchange. The contract had gained $1.21 Monday to settle at $65.97 a barrel.
July Brent crude slid 82 cents to $68.74 a barrel on the ICE Futures exchange in London.
Traders said prices could increase later in the day, but said market reaction to the IEA report likely would not be too significant.
"The report keeps to its alarmist trend to push for an OPEC supply increase," said Oliver Jakob at Petromatrix.
In its monthly oil market report, the IEA — the energy security watchdog for the Organization for Economic Cooperation and Development — warned that demand risked outstripping OPEC's ability to boost its output, a situation made worse by daily production growth from non-OPEC suppliers falling below the psychologically significant 1 million barrels a day this year.
OPEC has been under pressure to increase supply to world oil markets and ease high prices, which are due in part to threats to oil exports from violence and vandalism in Nigeria.
But
Iran's oil minister Kazem Vaziri Hamaneh said Monday that there is no need for OPEC to boost production. "There is sufficient crude oil in the market, there is no shortage of crude oil," he said.
Also helping lower prices was a positive report on Oman's oil production, after last week's Cyclone Gonu which claimed at least 49 lives.
Oil Minister Mohammed bin Hamed al-Rumhy told reporters Tuesday that all oil installations and oil fields in Oman were "running very normally without problems." He said oil exports had been halted only for two days, last Wednesday and Thursday.
Meanwhile, BP PLC said in its annual Statistical Review of World Energy that global primary energy consumption increased 2.4 percent in 2006, compared with 3.2 percent in 2005. Growth in 2006 was just above the 10-year average, BP said.
Growth slowed for every fuel except nuclear power, the U.K. oil company said. The Asia-Pacific region again recorded the most rapid growth, rising 4.9 percent, while consumption in North America fell 0.5 percent. Chinese energy consumption rose 8.4 percent and China continued to account for the majority of global energy consumption growth.
The IEA also forecast persistent tightness in the U.S. gasoline market, with inventories expected to dip through to July as question marks remain over whether there will be sufficient imports to substitute for lower inventories during peak summer demand.
While weekly fuel stocks data from the U.S. Energy Information Administration was expected to show that U.S. inventories of crude oil fell by an average of 400,000 barrels for the week ended June 8, petroleum product stockpiles were expected to rise for the sixth straight week, boosted by rising refinery output and higher imports.
Gasoline stocks were forecast to have increased by an average of 2 million barrels last week. Distillate stocks, which include heating oil and diesel fuel, were forecast to have increased by an average of 1.5 million barrels, according to a Dow Jones Newswires survey of energy analysts.
Heating oil futures fell 0.61 cent to $1.9230 a gallon while natural gas prices rose 2.7 cents to $7.635 per 1,000 cubic feet.
Associated Press
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