Oil prices fell Tuesday as traders weighed reports of restarts at two major U.S. refineries and expectations U.S. petroleum inventory data expected to show that gasoline supplies fell again.
The refinery problems caused some concern over gasoline tightness in the U.S., particularly after the U.S. Energy Department reported last week a surprisingly large decline in gasoline stockpiles and continued high demand beyond the traditional U.S. driving season.
But a crude distillation unit at Valero Energy Corp.'s refinery in Port Arthur, Texas, has been restarted at a lower rate after downtime of about a week.
Dow Jones Newswires also reported that the processing units, including a reformer, at a Chevron Corp. refinery in Mississippi refinery have returned to service. The facility is one of the top 10 petroleum refineries in the U.S.
OPEC Secretary General Abdalla Salem el-Badri said Tuesday that brimming oil stock levels are a signal the market doesn't need more oil and prices are being kept high by U.S. refinery woes.
"We see there's no reason for a higher price because there's enough oil in the market," he told Dow Jones Newswires in an interview.
"There's no shortage (of crude) whatsoever," he said.
Still, crude stocks are expected to fall 800,000 barrels, according to a Dow Jones Newswires survey of analysts, and distillate stocks, which include diesel and heating oil, are forecast to build 600,000 barrels.
Gasoline stocks in this week's report, due Wednesday, are expected to fall 1.8 million barrels. Refinery utilization rates are forecast to remain unchanged.
Light, sweet crude for October delivery slipped 20 cents to fetch US$71.77 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. In London, October Brent crude slipped 41 cents to US$70.54 a barrel on the ICE Futures exchange.
Nymex gasoline prices were down just over a penny at US$2.0234 a gallon (3.8 liters). Heating oil futures on the Nymex were down by about half a cent at US$2.004 a gallon (3.8 liters). Natural gas prices rose by 8 cents to US$5.465 per 1,000 cubic feet.
"Crude really derives all its value from the products that can be made from it," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "So when product prices go up, there is a knock-on effect on crude."
Still, Vienna's PVM Oil Associates noted that the high-demand U.S. driving season was about to come to an end, and "long-year seasonality suggests a downturn in the weeks to come."
Associated Press writer Gillian Wong in Singapore contributed to this report.