Updated from 11:58 a.m. EDT

Energy prices generally retreated Tuesday as traders sold futures to lock in profits ahead of another expected buildup in crude supplies.

Light, sweet crude lost 51 cents to settle at $66.23 a barrel on the Nymex. The May contract hit a high of $67.90 barrel on Monday, but fell to a close of $66.74. Over the past week, crude futures have risen 5% thanks to a mix of supply problems in Nigeria, an ongoing tussle with Iran over its nuclear program and low gasoline supplies.

Supplies of crude, currently at their highest point in seven years, are expected to increase by 1.2 million barrels from 340.7 million barrels, according to a

Bloomberg

poll of analysts. Oil has been building up at refineries because they are processing at lower rates, owing to a heavy maintenance schedule.

The Energy Department will release its weekly update on petroleum inventories at 10:30 a.m. EDT Wednesday.

Despite high crude supplies, ongoing supply problems abroad and an inflow of new money into the energy markets have kept oil prices high. Nigerian rebels have blown up pipelines and driven down that country's crude production by 27%, or 641,000 barrels.

Foreign oil companies, such as

Royal Dutch Shell

( RDS-A), which has lost around 455,000 barrels of daily crude production, have been particularly hard-hit.

Iran, despite a U.N. Security Council censure, has refused to cease small-scale uranium enrichment. The international community has considered the possibility of economic sanctions but is unlikely to follow through, analysts say. Last week, the Security Council said Iran had 30 days to cease its nuclear development activities.

On Tuesday, the Iranian foreign minister, Manouchehr Mottaki, said Tehran would disregard the Security Council's "political decision" and continue enriching uranium. Mottaki did hold out an olive branch and said Iran would work with the International Atomic Energy Agency, the U.N.'s nuclear watchdog,

Agence France-Presse

reported.

Another hotspot is Venezuela, where the government seized two oil fields from

Total

(TOT) - Get Report

and Italian oil firm

Eni SpA

(E) - Get Report

on Sunday. The fields produce nearly 100,000 barrels of crude a day.

Venezuela is trying to bring its petroleum industry under state control and has targeted 32 oil fields run by national and foreign companies.

Unleaded gasoline gained 3 cents to close at $1.89 a gallon on expectations of another drawdown in supplies. Analysts polled by

Bloomberg

expect gasoline inventories to drop 1.4 million barrels from 216.2 million barrels last week because less crude is being refined into derivative products. Inventories dropped 5.4 million barrels the previous week, the largest decline in the past three years.

Refiners, which usually close some of their units for maintenance in February and March, have extended that schedule into May this year because of new fuel requirements. By May 31, refiners must phase out methyl tertiary butyl ether, a gasoline additive linked to water pollution, in favor of reformulated gasoline that can be blended with ethanol.

Warm weather and surplus stockpiles drove down the price of heating oil 1 cent to $1.85 a gallon. Thanks to one of the five warmest winters on record, the supply of distillates, which include heating oil, is up 15% over a year ago.

Mild temperatures have also boosted supplies of natural gas 37% over a year ago. Natural gas, which is used to heat homes and businesses, was down 18 cents to $7.06 per million British thermal units. Factories and utilities have been switching to natural gas from fuel oil to take advantage of low prices.

Energy stocks and indices gained ground despite lower oil prices. The Philadelphia Oil Service Sector index was up 1%, while the Amex Oil Index added 1.5%. Shell picked up $1.04 to $63.89,

Valero

(VLO) - Get Report

gained 84 cents to $59.81, and

Exxon Mobil

(XOM) - Get Report

inched up 58 cents to $61.61.

Shares of

ConocoPhillips

(COP) - Get Report

rose 75 cents to $65.16 after the oil giant said first-quarter production would be "similar" to output in the fourth quarter of 1.6 million barrels a day. Higher output in Venezuela, Australia and the U.S will likely be offset by lower production in Norway, Nigeria, and Alaska.

Refining and marketing margins are expected to be lower than the previous quarter because of higher maintenance costs of $150 million and lower crude prices.

Schlumberger's

(SLB) - Get Report

chairman and chief executive said at an industry conference on Monday that he expects the company's revenue growth to be in the "mid to high teens" for the rest of the decade,

Reuters

reported. Annual revenue jumped 25% in 2005 to $14.3 billion as oil companies increased drilling. Shares of Schlumberger, an oil services company, jumped $2.23, or 1.8%, to $129.53.