Oil prices drop to mid-$87 in Asia

Source: Energy Digital

Date :10/17/2007 3:43:23 AM

Oil prices fell Wednesday from above $88 a barrel overnight amid expectations a fuel report due later today would show U.S. stocks rose last week.

Prices remained supported by concerns a Turkish incursion into Iraq in search of Kurdish rebels could disrupt crude supplies.

Turkey's parliament is expected Wednesday to agree that the government can launch a cross-border attack into Iraq sometime over the next year. The government has said an offensive against the rebels in northern Iraq will not immediately follow the authorization.

Irregular supplies

An incursion would threaten the pipeline that runs from Kirkuk, in Iraq, to the Turkish export terminal of Ceyhan. While exports of crude from Kirkuk to Ceyhan have been sporadic since the U.S.-led invasion of Iraq in 2003, oil has been flowing the past two months and in recent days was being shipped at a rate of nearly 500,000 barrels a day, Dow Jones Newswires reported.

Light, sweet crude for November delivery dropped 10 cents to $87.51 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract rose $1.48 to close at a record $87.61 a barrel Tuesday in the U.S. after rising as high as $88.20, a trading record.

Despite the gains, the price of oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.

Report

Traders were turning their attention to the U.S. Energy Department's midweek petroleum supply snapshot to be released later Wednesday. Crude oil and gasoline stockpiles were expected to have increased 1 million barrels each for the week ended Oct. 12, according to the mean forecast in a Dow Jones Newswires survey of analysts.

Heating oil futures lost 0.53 cent to $2.3334 a gallon while gasoline prices fell 0.05 cent to $2.1732 a gallon. Natural gas futures declined 0.2 cent to $7.365 per 1,000 cubic feet.

October 17, 2007