Oil prices lower after key US gasoline pipeline reopens

SINGAPORE (AFP) - Oil prices fell in Asian trade as gasoline (petrol) supply concerns eased after a key US pipeline re-opened over the weekend, dealers said.

At 10:30 am (0230 GMT), New York's main contract, light sweet crude for July delivery was 40 cents lower at 64.68 US dollars a barrel from 65.08 dollars in late US trades Friday.

Brent North Sea for July delivery dropped 34 cents to 68.73 dollars.

The re-opening of a pipeline carrying gasoline supplies to the US east coast by the Colonial Pipeline Company Sunday was the main factor behind the price decline, dealers said.

"The pipeline restarted on Sunday and the pipeline is a main distribution pipeline to get gasoline to the east coast," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

"That is back on line and is reassuring because gasoline supply worries in the US have been driving up crude oil," he said.

US gasoline demand has entered its peak demand period as the US driving season gets underway with millions of Americans due to take to the nation's highways en route to summer holiday hot spots.

Gasoline supply concerns will remain a key factor influencing the market after the US Department of Energy showed petrol reserves rose by 1.3 million to 198 million barrels in the week to May 25, lower than market expectations for an increase of 1.5 million barrel.

US crude reserves fell 2.0 million barrels to 342.2 million barrels in the week ending May 25. That caught many analysts, who had forecast an increase of 1.0 million barrels, off guard.

Below-average stock levels of gasoline have forced retail gasoline prices higher across the United States