Oil prices slipped further Tuesday but held above US$80 a barrel as investors stayed on the sidelines ahead of the U.S. Energy Department's weekly report due Wednesday.
Light, sweet crude for November delivery slipped 8 cents to US$80.16 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.
The contract fell US$1.42 to settle at US$80.24 a barrel Monday in the U.S. amid continuing concerns that market fundamentals do not support recent record-high prices. The front-month dipped as low as US$79.45 during the floor session.
"The market's been very quiet this morning, with some profit-taking by investors" after September's record-setting rally, said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
"The U.S. Energy Department's weekly inventory report is due Wednesday night and that will be important for the short term direction of oil prices," he said.
Energy investors are also closely monitoring the U.S. and global economies to see if the subprime mortgage crises has caused an economic slowdown that could affect demand for oil and gasoline.
Oil prices peaked at a record US$83.90 in the second-half of September, and drove back to near US$83 a barrel last week on supply concerns caused by tropical storms and on buying spurred by the low U.S. dollar. Oil and other commodities denominated in dollars have been kept inexpensive in the eyes of foreign investors, because the greenback has been sliding against other currencies following the Federal Reserve's recent interest rates cuts.
Investors are betting the rally has largely run its course, as fundamentals reassert themselves as the market's price driver this month. Oil inventories are high and demand for crude is expected to fall as refineries shut down to conduct routine fall maintenance.
Prices could ease below US$80 a barrel as the oil supply chain looks secure with clear weather forecasts and few fresh geopolitical developments, analysts say.
November Brent crude fell 16 cents to US$77.48 a barrel on the ICE futures exchange in London.
Heating oil futures gained 0.19 cent to US$2.1826 a gallon (3.8 liters) while gasoline prices slipped 0.39 cent to US$1.9774 a gallon. Natural gas futures added 3 cents to US$7.08 per 1,000 cubic feet.
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