* Oil falls below $108 as investors take profit
* Market awaiting details on U.S. government's rescue plan
* Saudi Arabia trims oil supply to majors (Releads, updates
prices)
By Fayen Wong
PERTH, Sept 23 (Reuters) - Oil reversed course and shed
over $2 on Tuesday as investors, still unsure about the impact
of the U.S. bailout plan, booked profits a day after prices
surged nearly 16 percent, the biggest one-day gain on record.
Although the market surged a day earlier on hopes the
rescue plan would improve the outlook for energy demand,
traders said investors were still struggling to find answers
about the cost to finance the $700 billion package to shore up
the financial system and ease the deepening credit crisis.
U.S. light crude for November delivery <CLc1> was fell
$2.52 to $106.85 a barrel by 0723 GMT. London Brent crude
<LCOc1> fell $2.51 to $103.53.
The November contract rose nearly $7 on Monday, while the
expired October contract, which traded $25 higher, settled up
16 percent at $120.92 -- marking the biggest one-day gain on
record.
"I think traders are taking profits after the rally in
both
October and November contracts last night. The market will
probably wait and see what's going to happen to the U.S. rescue
plan before making their next moves," said Gerard Rigby, an
independent energy consultant based in Sydney.
"There are still a lot of question marks on the bailout
plan and the longer it takes to be approved, the more doubts
the market will have."
The planned $700 billion bailout to shore up the battered
U.S. financial system looked set to drag into next week as
Washington lawmakers haggled over how exactly they could make
Wall Street pay for its rescue. []
Since hitting record highs above $147 a barrel in mid-July,
oil has tumbled on mounting evidence that high energy costs and
economic woes were undercutting global fuel demand.
Oil demand in the United States, the world's biggest
consumer, is running about 4 percent below last year, according
to the latest government data.
In a research report titled "The world did not run out of
crude oil on October expiry", BNP Paribas' Harry Tchilinguirian
said the prices achieved in the October contract were not
sustainable in the current economic context.
But news of Saudi Arabia trimming its supply to oil majors,
ongoing unrest in Nigeria, and higher-than-expected Chinese
imports would support oil prices, Barclays Capital said in a
research note.
Top oil exporter Saudi Arabia has trimmed oil supplies to
international majors and U.S. refiners since the start of
September, industry sources said on Monday. []
The slow recovery of the U.S. oil sector after Hurricane
Ike, which caused the biggest disruption to the nation's energy
supplies since 2005, could also keep prices firm, analysts
said.
Nearly 80 percent of oil production in the U.S. Gulf of
Mexico, home to a quarter of all U.S. oil output, remained
shut, along with seven refineries.
Ecuador, OPEC's smallest member, said on Monday world oil
prices were expected to remain above $100 a barrel in 2009 and
the oil market would probably stabilise after weeks of
volatility.
Ecuadorean Oil Minister Galo Chiriboga said he saw no need
for an extraordinary OPEC meeting to review output levels as he
expected strong demand in the northern hemisphere due to the
winter ahead and growing energy demand in Asia
[].
(Editing by Sambit Mohanty)
