SINGAPORE, (AP) – Oil prices retreated from highs last week but stayed above $63 a barrel in early Monday trading.
Prices rose steadily last week on renewed supply concerns as U.S. inventories fell and OPEC decided to cut output in February.
In midafternoon Asian electronic trading on the New York Mercantile Exchange, light sweet crude for January delivery fell 29 cents to $63.14 as traders cashed in on last week’s gains.
February Brent at London’s ICE Futures exchange gave up 24 cents to trade at $63.25 a barrel.
Some analysts have suggested the post-OPEC announcement surge could be the impetus that brings oil prices back above $70 a barrel. In mid-July, crude briefly surpassed $78 a barrel, but dropped sharply. The contract has been trading between $58 and $64 a barrel since early October.
Global crude oil inventories are still abundant, but many energy traders see any potential decline in supplies as a reason to bid up prices — especially against the backdrop of resilient consumer demand.
The Organization of Petroleum Exporting Countries pledged to cut production in February by half a million barrels a day. By delaying action until 2007, OPEC left itself a window to decide against a cut, should demand spike higher due to a colder-than-expected winter or stronger-than-expected economy.
In its official statement, the cartel said it expects non-OPEC supplies to grow by 1.8 million barrels a day in 2007, the biggest one-year jump since 1984, and about 500,000 barrels per day more than anticipated global demand growth of 1.3 million barrels.
OPEC’s decision followed the U.S. government’s weekly report on Wednesday, which showed that inventories of crude oil, heating oil and gasoline fell last week. Crude oil inventories remain well above last year’s level, but heating oil and gasoline inventories are now lower than where they were a year ago.
In other Nymex trading, heating oil futures fell 0.92 cent to $1.7725 a gallon, natural gas futures dropped 18.9 cents to $7.220 per 1,000 cubic feet, while unleaded gasoline rose 1.37 cents to $1.7000 a gallon.