Oil Prices Slide As Profits Locked In

February 12, 2008 - 9:31am

By GEORGE JAHN
Associated Press Writer

VIENNA, Austria (AP) - Oil prices retreated Tuesday, with traders locking in profits, after jumping almost $2 in the previous session on concerns about potential supply disruptions in Venezuela and Nigeria.

Crude futures were supported by Venezuelan President Hugo Chavez's threat on Sunday to cut off oil sales to the U.S. in retaliation for court orders freezing assets belonging to Venezuela's state oil company. There were also reports of new violence in Nigeria, Africa's largest oil producer.

Light, sweet crude for March delivery lost 90 cents to fetch $92.69 a barrel by afternoon in European electronic trading on the New York Mercantile Exchange. On Monday, the contract jumped $1.82 to settle at $93.59 a barrel.

"The oil price went up fairly sharply last night, and it's still at high levels by the standard of recent days and certainly well within the high end of the ranges we saw last night," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.

The Schork Report, edited by energy analyst Stephen Schork, noted that while prices were at a three-month low just a week ago "since then it would appear that a lot of bullish money has found its way back into the market."

In addition to "Chavez's tired shtick," the newsletter blamed outages at Valero's Delaware City refinery for Monday's upsurge.

In Nigeria, unidentified gunmen Monday attacked a naval vessel that was escorting petroleum industry boats, killing one sailor and injuring another.

The attack is the latest incident to unnerve traders after Royal Dutch Shell PLC said last week that it would not be able to honor all its export contracts from the troubled Niger Delta region for two months due to sabotage of a pipeline. Approximately 130,000 barrels a day of production are believed to be shut-in as a result of the force majeure declared by the firm.

In Venezuela, Exxon Mobil Corp. has gone after Petroleos de Venezuela SA in U.S., British and Dutch courts, challenging the nationalization by Chavez's government of a multibillion dollar oil project. A British court last week issued an injunction freezing as much as $12 billion in Petroleos' assets.

"The combination of these factors creates some concerns about the supply side of the equation," Moore said.

Heating oil futures were down 1.62 cents at $2.558 a gallon (3.8 liters) while gasoline prices lost 2.42 cents to sell at $2.372 a gallon.

Natural gas futures slipped by 6 cents, fetching $8.471 per 1,000 cubic feet.

In London, Brent crude lost $1.19 to trade at $92.34 a barrel on the ICE Futures exchange.