Crude up and down as investors expect rally to fail

Crude oil prices were up and down on Thursday as profit-taking and new supply fears based on concerns about weather in the Gulf of Mexico had their effect on investors.

Wednesday’s US inventories data, with gasoline supplies falling much more than had been expected, also provided incentive for prices to rise, as did data showing that output had been affected by a number of recent unscheduled shutdowns in refineries.

Output fell by 10 percentage points to 86 percent on the East Coast, while refineries in the Midwest saw their output fall to 90 percent. But prices fell a bit after weather forecasters said that Hurricane Katrina would not be likely to affect oil-producing regions in the Gulf of Mexico.

By the close of trade in New York, October contracts for West Texas Intermediate crude on the New York Mercantile Exchange had added 17 cents to $67.49 per barrel.

Brent crude for October delivery gained 26 cents to $66.27 per barrel, just off a new record high of $66.65 per barrel. Analysts were beginning to question how much longer and how much higher the current rally in crude oil prices could run.

It was said that prices could conceivably reach $70 per barrel on short-term supply concerns, but that it was questionable whether any advances beyond that are sustainable in the present conditions.

Some analysts were of the opinion that the end of the rally was in sight, but that it is not quite over yet.