By Cassie Werber
Crude oil futures were lower in London trading Tuesday, with the market preparing for more news on the end of quantitative easing, and participants seeking to capitalize on price gains made last week.
Brent crude for October delivery fell 42 cents to $109.49 a barrel on ICE Futures Europe. U.S. crude-oil futures fell 63 cents to $106.47 a barrel on the New York Mercantile Exchange.
"Ahead of Wednesday's publication of the Fed's meeting minutes, market players are clearly taking profits while they can," wrote analysts at Commerzbank in a note to clients. The Federal Open Market Committee's minutes are widely expected to give more clarity on when its program of stimulus will begin to end.
Oil prices have seen rises over the past week, with tension in Egypt and supply problems in Libya among the driving factors.
Egypt, where violent clashes between the army and some of the country's religious and political factions has been escalating, is a key oil region mainly because it controls the Suez Canal. It is through this conduit that much of the Middle East's oil is transported to the Mediterranean and to other export destinations, including the U.S.
Libya, meanwhile, is an important producer that is still grappling with internal tension.
"According to industrial sources, roughly half of Libya's oil production is still out of operation," Commerzbank noted. The country's National Oil Corp. yesterday declared force majeure on four ports.
The Middle East tension is likely to provide some ongoing support to the oil price because it threatens supply, analysts said.
"Mediterranean refiners will have to find replacements for Libyan grades over the coming month," wrote analysts at JBC Energy Markets. "Lighter Nigerian grades appear to be a favorable alternative judging by higher Suezmax [oil carrier] freight costs seen along the route between West Africa and the Med."
Meanwhile, data released yesterday by IntercontinentalExchange Inc. indicated that speculative length in oil - or bets that the price will rise - was at an all-time high. By August 13 it had inched up 2.5% week on week. Some of these long positions will have been liquidated today as the price began to head downwards.
Recently the ICE's gasoil contract for September delivery was down $7.00 at $935.25 a metric ton, and Nymex gasoline for September delivery was down 158 points, or 0.5%, at $2.9175 a gallon.
