Oil prices continued falling Tuesday amid worries that crude prices have risen too high in recent weeks and speculations over OPEC comments that may signal a less bullish position on production and supplies.
Light, sweet crude for September delivery lost 84 cents to US$74.05 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. On Monday, the contract had fallen 90 cents to US$74.89 a barrel.
September Brent crude dropped 94 cents to US$75.92 a barrel on the ICE Futures exchange in London.
A fair price for crude oil is between US$60 and US$65 a barrel, Hasan Qabazard, head of research for the Organization of Petroleum Exporting Countries, told Dow Jones Newswires on Monday - leading some to conclude the cartel may be open to reversing its long-held position that oil supplies are adequate.
Qabazard's comment came after other comments from OPEC President Mohammed al-Hamli, reported Sunday, that the group is concerned about the impact of higher oil prices.
"The OPEC comments gave traders a good opportunity to take profit as it was really too high," said Koichi Murakami, an analyst with Tokyo brokerage Daiichi Shohin.
Energy traders were most focused on the prospect that OPEC could boost output, analysts said. The group has maintained for months that high oil prices are not its fault, and analysts have criticized OPEC for cutting production this year.
Qabazard, however, stopped short of announcing the cartel will increase output, saying that while prices are hovering above his target range, he sees no reason for OPEC to increase output at its September meeting.
Al-Hamli said as well that it is not yet clear whether production will be raised by the end of the year.
Others, however, said OPEC's comments would not have a deep impact.
"The rhetoric alone is insufficient to divert the current bull run," said Paul J. Harris, head of natural resources risk management at Bank of Ireland Global Markets. "Whilst traders have cut the extent of their long positions, technicals still suggest further upward moves to test the highs of last August."
Market participants were also awaiting the Wednesday release of weekly U.S. government data on the country's fuel inventories.
Analysts surveyed by Dow Jones expect the U.S. Energy Information Administration's report to show crude oil stocks falling 1.1 million barrels and gasoline stockpiles growing by 510,000 barrels last week. Distillates, which include heating oil and diesel, are forecast to have gained 730,000 barrels.
Nymex heating oil futures lost 1.21 cents to US$2.0440 a gallon (3.8 liters). Gasoline prices lost 1.91 cent to US$2.0850 a gallon. Natural gas futures dropped 0.9 cent to US$6.030 per 1,000 cubic feet.
U.S. refinery use is expected to have grown 0.8 percentage point to 91.8 percent of operable capacity. If the forecasts for refinery usage ring true, it will be the highest use level since September 2006. The average for this time of year is 94 percent.
"EIA data will test the resolve of the bulls in the market," Harris said, adding that it would take only a slight change from expectations on the upside to push Brent prices back to near US$78 a barrel.