Profit Taking Halts Rally in Oil Prices

A midweek rally in oil prices proved to be short-lived as traders took profits at week’s end.

Analysts said volume in the oil futures market was extremely light Thursday in advance of the Christmas holiday. Trading ended early, at around 1 p.m. (EST).

Iranian speedboats reportedly fired at a U.S. Navy helicopter in the southern Persian Gulf, but the report had little effect on trading, analysts said. No injuries or damages were reported from the Gulf incident.

On the New York Mercantile Exchange, contracts for February delivery of West Texas Intermediate, the benchmark U.S. crude, lost 12 cents to $16.52 per 42-gallon barrel after a gain of $1.24 over the last two trading sessions.

Prices also declined for refined products traded on the exchange.

Contracts for January delivery of wholesale heating oil closed at 51.25 cents a gallon, down 0.30 cent. January contracts for wholesale unleaded gasoline fell 0.36 cent to 43.43 cents per gallon.

Bob Baker, an analyst with Prudential-Bache Securities, said the market was too apprehensive to sustain a rally. He said traders remained skeptical of OPEC’s ability to reduce output and bolster prices.

The Organization of Petroleum Exporting Countries recently ended its winter meetings with no new agreement to address the world oil glut.

Reports that some members of the cartel would restrain production fueled a sharp turnaround in the market Tuesday, but the bullish sentiment quickly dissipated in succeeding sessions, analysts said.