1 May 2007 - 09:42
  • News Code: 103551

LONDON -- Oil prices fell Monday as market jitters eased following an anti-terrorist sweep in Saudi Arabia, but concern about low U.S. gasoline inventories was expected to support prices in the longer term.

Light, sweet crude for June delivery fell 18 cents to $66.28 a barrel in electronic trading on the New York Mercantile Exchange (Nymex) in Europe. Brent crude for June on the ICE Futures exchange dropped 18 cents to $68.28 a barrel.

 

Nymex crude had surged above $66 a barrel late Friday after Saudi Arabia announced the arrests of 172 Islamic militants, some of whom allegedly planned to attack oilfields.

 

Olivier Jakob of the Petromatrix consultancy in Switzerland said the arrests didn"t immediately justify a price hike.

 

"The threat to Saudi oil is a constant underlying one and we do not read yet a new imminent risk," he said Monday. "The Saudis" sudden urge to communicate is not fitting with previous patterns and while it makes a nice headline we want to make sure before adding any risk premium that it is not a collection of small events that have been added up in a public relations exercise."

 

U.S. gasoline inventories have fallen for 11 weeks in a row. Last week"s U.S. Energy Department report showed a drop in U.S. gasoline stockpiles of 2.8 million barrels and said U.S. refinery use declined to 87.8 percent of capacity.

 

Continuing refinery problems, temporary shutdowns or delayed starts, as well as regular maintenance shutdowns, are contributing to the supply concerns. With the start of the summer driving season about a month away, some analysts wonder whether gasoline supplies will be adequate to meet demand.

 

In other Nymex trading Monday, heating oil futures fell a third of a cent to $1.9099 a gallon, while natural gas prices dropped 1.1 cent to $7.820 per 1,000 cubic feet.

 

The market is also watching events in Nigeria and Iran -- key producers where current events have raised concerns about supply disruptions. "Last week"s flawed Nigerian presidential elections continue to add uncertainty to the supply out of Nigeria," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "And while there are some positive movements on the Iranian front, it is still too early to say how the nuclear issues will be resolved."

 

In Nigeria, President-elect Umaru Yar"Adua has pledged to make securing the oil-rich Niger delta a major priority of his government. He is set to succeed President Olusegun Obasanjo on May 29 after a vote earlier this month that was marred by violence and widespread charges of rigging.

 

On Friday, gunmen shot dead two policemen in Nigeria"s oil center of Port Harcourt in a failed attempt to kidnap two foreign oil workers. The area has seen an upsurge of armed violence in recent years, most of it the kidnapping for ransom of foreign oil workers.

 

PIN/AP

News Code 103551

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