US oil prices extended losses today but stayed above $40 a barrel, weighed down by profit-taking and creeping expectations that tight supplies could see some relief in the coming weeks.
US light crude fell 45 cents, or just over 1 per cent, to $40.09 a barrel, after sliding $1.01 today as traders took profits from a rally to a 21-year peak at $41.85 at the start of the week. US crude has traded above $40 for seven straight days.
London's benchmark Brent crude fell 35 cents to $36.60. Analysts expect data due for release later today to show an increase in US gasoline supplies, the barometer for overall demand during the summer months in the world's biggest oil consumer.
US gasoline inventories have been running at a deficit compared with year-ago levels, raising fears of a possible supply crunch during peak summer demand, when consumption accounts for about 12 per cent of global oil use.
Analysts expect the weekly report from the US government Energy Information Administration (EIA) to show a 1.4 million-barrel increase in gasoline stocks in the week to May 14th. They also predicted crude stocks to rise by 1.8 million barrels.
The US AAA said last night that despite record gasoline prices at the pump, around 30.9 million travellers, up 3.9 per cent from last year, were expected to drive 50 miles (80 km) or more at the Memorial Day weekend at the end of May.