The oil market was suffering through a volatile session Monday amid reports of supply disruptions and continued skittishness from last week's selloff. Prices for nearby futures for light sweet crude were dipping 65 cents at $55.66 a barrel on the Nymex. The US Oil ETF ( USO), which holds oil futures contracts, was also lower, off 1.3% recently. "It may not be a full-fledged bear market, but there may be trouble getting back to the previous highs without a major catalyst," says Alan Mandel, strategist at Alan M Trading in New York. Also slipping were prices for heating oil, off about a 0.3 cents at $1.563 a gallon, and gasoline, lower by 2.41 cents at $1.469 a gallon. Earlier in the session, prices had been up across the board after published reports that Russia had cut supplies of oil to Europe via Belarus. A spat between the Russia and the other former Soviet republic is blamed. However, the concerns were short-lived, and crude prices gave up their gains and retreated into negative territory. Natural gas was standing out with prospects building for winterlike weather in the coming days. Prices were up 20.5 cents at $6.389 per million British thermal units. "This week and next week should get colder," and so lend more support, says Edward Meir, an analyst at commodity brokers Man Financial.
Longer term, the Economist Intelligence Unit, a provider of country, industry and management analysis, sees prices for West Texas intermediate crude averaging around $66 a barrel for 2007. "Geopolitical tensions (never too far away) will ensure that prices remain elevated," the report from EIU states. Additionally, the report says a rebounding U.S. economy should help demand. Turning to the energy complex, giants Exxon Mobil ( XOM) and Royal Dutch Shell ( RDS.A) were losing ground, down 0.6% and 1.2% respectively. Elsewhere, Jefferies cut is stock price target on Dominion Resources ( D) to $68 a share from $74 and reiterated its underperform rating. The stock was losing 0.2% lately.