Oil prices lower in Asian trade on US gasoline worries

SINGAPORE: Oil prices fell in Asian trade Friday on profit-taking after overnight gains made amid persistent concerns over US gasoline (petrol) supplies during the peak demand season, dealers said. At 10:30 am (0230 GMT), New York's main contract, light sweet crude for July delivery, was down 18 cents to 66.75 US dollars a barrel from 66.93 dollars in late US trades Thursday where it had jumped 97 cents. Brent North Sea crude for July delivery was 16 cents lower at 71.06 dollars.

Gasoline supplies remain the key issue during the US summer driving season where demand usually peaks as most Americans take to the roads for their vacations, dealers said. Latest figures from the US Department of Energy (DoE) showed gasoline stockpiles rose by 3.5 million barrels in the week to June 1, more than double market expectations for a gain of 1.6 million.

Despite the increase, gasoline reserves remain below the five-year average levels, triggering supply concerns, dealers said. "Gasoline stockpiles remain below the five-year average," said Gerard Burg, a minerals and energy economist with National Australia Bank in Melbourne. "It is the key thing that is affecting the market at the moment and really reflects the tightness in the market," he said.

Lower utilisation rates at US refineries are driving the concern over gasoline. "The surprise reduction in refinery runs is definitely boosting prices as the peak demand summer driving season gets underway," said BNP Paribas analyst Harry Tchilinguirian. Standard Chartered Bank said the market is expected to tighten further in the third quarter ahead of the US hurricane season but predicts oil cartel OPEC to raise production in the fourth quarter.