Oil prices inched lower Friday after rising overnight for the first time in four sessions as investors began to question whether supplies of crude and products are sufficient for coming winter demand.
Light, sweet crude for November delivery slipped 6 cents to $81.38 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. The contract rose $1.50 to settle at $81.44 a barrel Thursday in New York.
"There's been some very minor profit-taking today, but it's just part of the volatile trade in oil markets," said Victor Shum, a Singapore-based energy analyst with Purvin & Gertz. "The crude oil market remains fundamentally tight in the fourth quarter, and prices should hold steady above the $80 mark."
"Participants view it as a buying opportunity when prices fall to $79 so that should be a rather strong support," he said.
The U.S. Energy Department reported Wednesday that crude inventories rose 1.2 million barrels last week, while supplies of distillates, which include heating oil, fell 1.2 million barrels. Traders say the increase in crude supplies is inadequate, especially as winter approaches.
At the end of the third quarter, many U.S. refineries shut down for maintenance and regear their operations to turn out more home heating oil for the Northern Hemisphere winter. The refineries could start returning to production as early as this month, and that ramp-up would increase demand for crude oil.
Oil and other commodities denominated in dollars are becoming cheaper for foreign investors due to the dollar's weakness.
In Nigeria, government troops freed a kidnapped British national Friday morning near the oil industry hub of Port Harcourt, a military spokesman said.
November Brent crude fell 7 cents to $78.90 a barrel on the ICE futures exchange in London.
Nymex heating oil futures lost 0.23 cent to $2.2336 a gallon. Natural gas futures fell 6.4 cents to $7.348 per 1,000 cubic feet.
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