Crude futures dropped for the second straight day today as fears of supply disruptions caused by refinery breakdowns eased.
Midmorning in Singapore, light, sweet crude for September delivery slipped 66 cents to $65.61 a barrel in Asian electronic trading on the New York Mercantile Exchange. On Friday, the contract had peaked at $67.10.
Unleaded gasoline fell marginally to $1.9550 a gallon, and heating oil dropped slightly to $1.8596.
Unlike the past eight months of rising oil prices, prompted by long-term supply and demand outlooks, oil's recent push into the mid-$60 per barrel range was due to concerns about refinery outages in the United States.
Those fears eased yesterday even as refineries recovered from a rash of breakdowns at a dozen US refineries representing 16 per cent of the US refining capacity.
Oil prices, which are 46 per cent higher than a year ago, had risen nearly $10 a barrel over the past three weeks ending last Friday. But futures would need to surpass $90 a barrel to exceed the inflation-adjusted peak set in 1980.
Despite the price drop this week, oil traders remained concerned about Iran, which has become increasingly defiant in its desire to resume its uranium enrichment program.
New Iranian President Mahmoud Ahmadinejad has named a hardline Cabinet in
a move that could intensify Iran's confrontation with Western governments, who have threatened to impose sanctions on Iran through the United Nations to force it to cease uranium enrichment.
Analysts fear that Iran could cut back on oil producing if tensions increase, thereby hurting the global economy. Iran, which pumps four million barrels daily, is the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.