Oil Prices Dip, but Remain Above $70

SINGAPORE - Oil prices retreated Monday as traders took profits after crude futures closed above the $70-a-barrel mark last week for the first time in almost a year.

Light, sweet crude for August delivery lost 31 cents to $70.37 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore.

"The crude market is slipping some this morning, which I attribute to profit taking," said Victor Shum of Purvin & Gertz in Singapore. "Perhaps the market feels the jump last week in oil futures was overdone."

The contract on Friday rose $1.11 to settle at $70.68 a barrel after rising as high as $71.06 in intraday trading. The Nymex front-month oil contract last closed above $70 a barrel on the last day of August 2006.

"The key concern remains about making enough gasoline to meet summer demand," Shum said. "Coming into this week in the U.S., with the July 4 holiday in the middle of the week, expectations are that demand for gasoline will be high as many people will be driving."

U.S. gasoline demand is especially strong between the July Fourth holiday and Labor Day in September.

The concerns over gasoline demand were stoked on Wednesday when the U.S. Energy Department's Energy Information Administration reported that gasoline inventories dropped 700,000 barrels in the week ended June 22. Analysts polled by Dow Jones Newswires had expected a 1.1 million barrel gain.

Earlier in the year, an unusual number of refinery outages served as a bottleneck in the gasoline supply system, sending gasoline futures prices higher. Crude oil followed the gasoline prices higher in sympathy, traders said, even though crude stockpiles at the time were near nine-year highs.

Now, as refineries come back online, oil prices seem less tethered to gasoline futures, and crude oil stocks are falling as refiners try to crank out more gasoline.

Shum said three attempted terrorist attacks in Britain on Friday and Saturday were not affecting prices significantly as they had no impact on oil supply or demand.

Also Monday, August Brent crude futures fell 22 cents to $71.19 a barrel on the ICE Futures exchange in London.

Nymex heating oil futures dropped 0.14 cent to $2.041 a gallon. Natural gas prices lost 9.3 cents to $6.68 per 1,000 cubic feet.