Oil prices down sharp on profit-taking

Profit-taking and higher than expected gains in crude oil inventories in the US sent crude oil prices down sharply during the day on Wednesday, although a much larger decrease than expected in gasoline inventories sent gasoline prices into record territory before retreating later.

October contracts for Brent crude on the International Petroleum Exchange fell $2.52 to $62.56 per barrel by the close of trade in London, a drop of over 5 percent from its record high Monday. West Texas Intermediate crude for September delivery lost $2.83 to $63.25 per barrel by the end of the session on the New York Mercantile Exchange.

That took WTI down 4 percent from it’s record high prices of $67.10, which it reached on Friday.

US inventory figures showed that crude oil stockpiles grew by 300,000 barrels last week, while distillates added 1.2 million barrels to inventories on the week. Gasoline inventories, however, fell by 4 million barrels, much more than had been expected.

This drop, brought about largely by difficulties at several US refineries, sent Nymex gasoline for September delivery to a record high of $2.0290 per gallon before it dropped back to $1.9400 per gallon, which was a drop of 4.36 cents.

Analysts said that gasoline supply concerns were trailing off as the US summer driving season draws to a close.

In a related development, the Organization of Petroleum Exporting companies revised its projection of 2006 demand up by 30,000 barrels per day to an average of 85.2 million barrels per day. OPEC also lowered its estimate of supply from non-OPEC oil producers and raised the amount of oil it would have to produce next year to satisfy demand.

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