Oil Prices Fall on ProfitTaking Supply Concerns

Oil Prices Fall on Profit-Taking, Supply Concerns

"If this is just a withholding of inventory for tax purposes, the market is probably overdone," said Gene McGillian, a broker and analyst at Tradition Energy. A rise in oil inventories in early 2014 could "take the wind out of the sails" of the rally, McGillian said.

NEW YORK -- Oil prices retreated today on profit-taking and concerns that U.S. oil inventories will bounce back in early 2014 after recent declines.

U.S. benchmark West Texas Intermediate (WTI) for February delivery fell $1.03 to $99.29 a barrel.

European benchmark Brent oil for February delivery declined 97 cents to $111.21 a barrel in London.

WTI closed Friday above $100 a barrel for the first time since October following strong U.S. economic data, including a surprisingly big decline in U.S. oil inventories.

WTI's breaching of the psychologically important $100 level capped a comeback after oil sank to $92.61 a barrel on Nov. 28.

But Gene McGillian, a broker and analyst at Tradition Energy, said it still is unclear whether the recent decline in U.S. oil stocks reflects a real increase in demand.

Refiners typically reduce crude inventories at the end of the year in order to qualify fewer assets for tax purposes.

"If this is just a withholding of inventory for tax purposes, the market is probably overdone," McGillian said. A rise in oil inventories in early 2014 could "take the wind out of the sails" of the rally, McGillian said.

"The market is seeing a little bit of profit-taking," he added.

Analysts also cited comments from the Libyan national oil company that some oil operations in the country had resumed. However, Libyan oil exports remain curtailed due to a months-long blockade in the North African country.

Another drag on the oil market was the conclusion Friday of a strike at five Total (IW 1000/9) refineries in France after nearly two weeks.

Andrew Lipow, president of consultancy Lipow Oil Associates, attributed today's decline in gasoline and diesel prices to the end of the French strike.

"The big story is that the market is being weighed down by weakness in the petroleum products," Lipow said. "That's a direct reflection of the French refineries returning, adding to the product supply in Europe, which consequently is impacting the markets over here."

Copyright Agence France-Presse, 2013

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