Oil prices drop, weighed down by high energy supplies

7th September 2010, Comments 0 comments

World oil prices fell on Tuesday as the market reacted to the end of the peak demand season coming at a time when supplies are high, analysts said.

New York's main contract, light sweet crude for delivery in October, shed 1.68 dollars to 72.92 dollars a barrel.

Brent North Sea crude for October delivery dropped 1.16 dollars to 75.71 dollars a barrel in midday London trade.

Monday signalled the end of the US "driving season", or peak demand period for gasoline between May and September in the United States when Americans traditionally drive long distance for their summer holidays.

"This year, the end of the driving season comes at a time when oil demand is weak and inventories are near or above six-year highs," the Commonwealth Bank of Australia said in a report.

Morgan Stanley analyst Hussein Allidina said that crude futures were likely to spend the next month "in the upper-end" of the 70-80 dollars range.

"Crude oil prices have been surprisingly range-bound and are likely to remain so into mid-October, before ultimately trading higher as refiners exit maintenance, bolstering crude demand and tightening" inventories.

© 2010 AFP

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