WASHINGTON -- Oil prices fell by more than $1 a barrel yesterday , dipping below $67 as traders focused on slackening demand and rising supplies.
Crude futures have pulled back more than 15 percent from their all-time high in mid-July to levels not seen since early April. The Atlantic hurricane season so far has been tame, and there is growing skepticism that the diplomatic standoff between the West and Iran will prompt OPEC's number two producer to pull supply from the market.
``The sentiment of the market is to sell," said Mike Guido, director of commodity strategy at Societe Generale in New York.
Gasoline demand traditionally slips after Labor Day, and it will be a month or more before demand for heating oil and other winter fuels picks up in many parts of the country.
Supply worries eased Thursday after government data showed rising inventories of gasoline and distillate, which includes heating oil. The possibility that BP PLC could restore 180,000 barrels per day of lost Alaskan production at Prudhoe Bay by the end of October also eased supply fears. The market also anticipates the resumption of some oil production that was shut in Nigeria following militant attacks.
The Organization of Petroleum Exporting Countries meets next week, but analysts do not expect the cartel to alter its official output quota of 28 million barrels per day. If the cartel trims production in an attempt to prop up prices, analysts say the strategy could backfire because it would signal to a market that has worried for several years about tight supplies that the world finally has oil to spare.
Light sweet crude for October delivery on the New York Mercantile Exchange declined by $1.07 to settle at $66.25 a barrel -- the lowest closing price since finishing at $66.23 on April 6.
Brent crude fell $1.20 to settle at $65.33 a barrel on London's ICE futures exchange.
Gasoline futures fell by more than 3 cents to $1.6098 a gallon. Heating oil fell more than 4 cents to settle at $1.8432 a gallon. Natural gas fell more than 4 cents to settle at $5.675 per 1,000 cubic feet.
October Brent crude on the ICE Futures Exchange was down 30 cents at $66.23 a barrel.
US crude inventories fell 2.2 million barrels last week to 330.6 million barrels, according to the US Department of Energy. However, inventories remain 6.2 percent above year-ago levels and rising productivity by refiners has pushed up supplies of motor- and home-heating fuels.
Gasoline inventories rose by 700,000 barrels to 206.9 million barrels, which is 6.6 percent above year-ago levels. Distillate fuel inventories rose by 3.1 million barrels to 139.9 million barrels -- a bigger build than most analysts expected. They are now slightly above were they were a year ago.