Oil prices lower in Asian trade



AFP
SINGAPORE
Petroleumworld.com 02 13 06

Oil prices fell in Asian trade Monday, continuing lower as concerns over Iran's controversial nuclear energy program eased further against a backdrop of high US inventories, dealers said.

At 11:01 am (0301 GMT), New York's main contract, light sweet crude for delivery in March, was down 33 cents to 61.51 dollars a barrel from its close of 61.84 dollars in the United States Friday.

Crude oil prices have slumped to their lowest levels of the year after spiking at 69.20 dollars per barrel in New York on January 23, near the all-time highs of 70.85 dollars in August 2005 after Hurricane Katrina.

Ample stockpiles in the United States have eased worries of supply disruptions from Iran, the world's fourth-largest producer, should the standoff with the international community over its nuclear program worsen further, dealers said.

"The geopolitical news out of Iran has calmed down lately ... due to the high inventories, the market is well supplied (and) so the market has trended down," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

The US Department of Energy's latest report showed reserves of distillates, used for heating and diesel fuel, totalled 136 million barrels in the week to February 3, 12.4 percent above last year's levels.

Gasoline, or petrol, inventories amounted to 223.3 million barrels, 1.7 percent above their level at the same stage last year.

"The distillate inventories are quite high," Shum said.

Venezuela's pledge to keep supplying oil to the United States despite an ongoing political rift was also a relief to the market, dealers said.

In the immediate term, however, Iran's dispute with the United Nations over its nuclear program will likely keep prices above 60 dollars a barrel, Shum said.

"The dark cloud of the Iran situation is going to hang over the market for a while and it will provide some support to prices," he said.

Others see a short-term trend down toward the next support level of 60 dollars.
Oil prices topped 66 dollars last week after the International Atomic Energy Agency (IAEA) voted to refer Iran to the UN Security Council over its controversial nuclear program.

While reporting Iran to the Security Council, the IAEA left a one-month window for diplomacy.

Tehran has responded to the Security Council referral by resuming uranium enrichment and stopping spot checks of its nuclear sites by the United Nations.

The market is worried that Tehran may also decide to disrupt its oil exports.

The Islamic republic is the second biggest producer within the Organization of Petroleum Exporting Countries (OPEC) and exports 2.7 million barrels of crude per day.

AFP 02/13/06

Copyright © 2006 AFP. All rights reserved

 

 

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