Oil Falls on Profit Taking

(AP) - Oil prices dropped nearly $1 a barrel Monday as traders took profits from the rise in crude futures last week on global supply worries. Markets also awaited comments from OPEC ministers ahead of a meeting at which they are expected to maintain current output.

Light, sweet crude for October delivery lost 88 cents to $75.82 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. October Brent crude fell 99 cents to $74.08 a barrel on the ICE Futures exchange in London.

The 12-nation Organization of Petroleum Exporting Countries is almost certain to maintain its current production target, with the U.S. summer driving season over and demand for gasoline and diesel fuel slackening.

Oil officials from several OPEC members have signaled that the group will maintain its official output quota of 25.8 million barrels a day at Tuesday's meeting. But key member Saudi Arabia has not said publicly what it wants the cartel to do.

But analysts say the cartel, which produces about 40 percent of the world's oil, could be forced into action if rising crude prices start impacting the global economy. Crude futures hit a record $78.77 a barrel on the New York Mercantile Exchange in early August.

"There are fairly supportive supply-demand fundamentals going forward ... we therefore have a rather bullish oil environment," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore, adding that part of last week's gains were due to the re-entry of speculators into the oil market.

"With the exception of the uncertain economic outlook due to the subprime mortgage crisis in the U.S., there is really little downside risk to the crude oil futures market."

Some energy investors worry that credit tightness from problems in the mortgage industry has spread to other sectors, which could curb demand for oil and gasoline.

Oil prices were supported by last week's inventory report from the U.S. Energy Department, showing that supplies of both crude oil and gasoline fell in the week ended Aug. 31. But analysts also cited the diminished threat that hurricanes would disrupt production in the Gulf of Mexico and surrounding areas as a factor which could pressure prices lower.

On Monday, six explosions, believed to be sabotage, ripped apart pipelines of Mexico's state oil monopoly, Petroleos Mexicanos, or Pemex, said. Government officials said 12,000 people were evacuated. There was no immediate word of production disruptions.

In July, a small, left-wing guerrilla group claimed to have attacked a major Pemex gas pipeline and at least a dozen major companies, including Honda Motor Co., Kellogg Co. and The Hershey Co., were forced to suspend or scale back operations.

Heating oil futures dropped 0.91 cent to $2.1341 a gallon (3.8 liters) on the Nymex, while gasoline prices declined 3.17 cents to $1.9547 a gallon. Natural gas futures rose 0.7 cent to $5.508 per 1,000 cubic feet.