Oil Futures Descend as Traders Eye High Supplies

By Nicole FriedmanDow Jones Newswires

NEW YORK--Oil futures slipped Thursday as traders who had bet on higher profits locked in their profits after Wednesday's rally.

Light, sweet crude for June delivery settled down 51 cents, or 0.5%, at $100.26 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 9 cents, or 0.1%, to $108.04 a barrel.

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U.S. prices closed above $100 a barrel but erased Wednesday's 1.3% gain, as traders cashed in their profits from the previous day.

Prices climbed Wednesday after a government report showed U.S. oil supplies fell last week, contrary to analyst expectations that stocks would rise to a new record high. Still, inventories remain near their highest levels, according to weekly U.S. Energy Information Administration data going back to 1982.

"We got a little bit more exited yesterday, I think. Today, cooler heads prevailed," said Phil Flynn, analyst at Price Futures Group in Chicago. Market participants "realized there is a lot of oil out there," he said.

Traders were also reluctant to take new positions because of uncertainty over the unrest in Ukraine, Mr. Flynn said.

Oil prices have been supported in recent weeks by fears that violence in Ukraine could lead to further Western sanctions against Russia that could crimp oil exports. Russia is the No. 2 oil-exporting nation.

So far, western sanctions have only touched individuals and companies and haven't affected exports.

Russian President Vladimir Putin said on Wednesday that pro-Russian separatists in eastern Ukraine should delay a referendum on seceding from Ukraine to allow for dialogue with Kiev, a sign that Russia is trying to ease tensions.

However, the main Ukrainian separatist groups decided on Thursday to go ahead with a referendum set for Sunday.

"There's not really a clear sense of what's going on," Mr. Flynn said. "How do you trade off that?"

Front-month June reformulated gasoline blendstock, or RBOB, settled down 1.32 cents, or 0.5%, at $2.9050 a gallon. June diesel settled down 0.73 cent, or 0.3%, at $2.9202 a gallon.