TOKYO: Oil futures slipped on Monday in modest profit-taking from a surge late last week on jitters over Nigerian output, but losses were checked by refinery outages and signs that OPEC’s supply cuts were helping drain stockpiles.
Frontmonth U.S. crude for March delivery was down 20 cents at $59.19 a barrel on the Globex electronic trading platform, after falling to as low as $58.87. London Brent crude was trading down 10 cents at $58.85 a barrel.
Traders said activity was likely to be muted as the NYMEX floor is closed on Monday due to the Presidents Day holiday. Electronic trading continues as normal on Globex.
Prices surged $1.40, or 2.4 percent, on Friday after the United States warned that militants from Nigeria’s oil-producing delta plan to expand their attacks on foreign nationals beyond the Niger Delta region.
Violence in the delta over the past year has already cut output from Africa’s top producer by a fifth, and analysts fear it may escalate ahead of presidential elections in April.
North American refinery outages lent added support.
A crude unit at Imperial Oil Ltd.’s 118,000 barrel per day (bpd) Nanticoke, Ontario, refinery was hit by a fire on Thursday, while Valero Energy Corp. shut down its 158,000 bpd McKee refinery in Sunray, Texas, on Friday after a fire broke out.
For the past two and a half weeks, oil prices have bounced around a narrow trading band of about $57-$60 a barrel, a level that appears to satisfy many members of OPEC ahead of their next scheduled meeting on March 15 in Vienna.
Iranian Oil Minister Kazem Vaziri-Hamaneh said on Saturday he did not expect another OPEC output cut if crude prices continued to rise, backing up other ministers who say the group’s pledged 1.7 million barrel per day cuts are doing the trick.
“I think there is a consensus that output will be unchanged,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. “The cartel’s output cuts had some impact and resulted in reduced imports in the United States.”
U.S. crude oil inventories fell by 3.7 million barrels last week and now stand 1.5 percent below year-ago levels, with many analysts expecting another big drawdown this week.
Weekly government stock data will be released a day later than usual due to the Presidents Day holiday.
Despite current chilly U.S. weather conditions that have lifted demand for heating oil, many analysts are already looking beyond winter toward the weaker spring season, when demand ebbs.
Forecaster DTN Meteorlogix said on Friday the U.S. Northeast will be up to 16 degrees Fahrenheit (5-8 C) below normal early this week before moderating by the weekend.