Oil prices retreat in Asian trading




AFP
SINGAPORE
Petroleumworld.com 03 13 06

Oil prices continued to ease in Asian trade Monday, hovering below the key 60 dollar mark as the market on strong US inventories instead of global supply concerns in Nigeria and Iran, dealers said.

At 11:01 am (0301 GMT), New York's main contract, light sweet crude for delivery in April, was down eight cents to 59.88 dollars a barrel from its close of 59.96 dollars in the United States on Friday.

"It's breaking it again," Tony Nunan, an energy risk manager for Mitsubishi Corp, said of the 60-dollar support point. "It is a pretty bearish (negative) market with the huge builds in crude in the US."

Crude prices fell last week after the US Department of Energy (DoE) said in its weekly inventories report that US reserves were about 10 percent higher than at the same stage a year ago.

Julian Lee, analyst at the Centre for Global Energy Studies, said oil market fundamentals -- specifically rising stocks and slowing seasonal demand -- pointed to "a gentle easing" of prices below 60 dollars.

A decision by the Organization of Petroleum Exporting Countries (OPEC) to keep pumping oil at a near 25-year high further depressed prices on Wednesday after the cartel decided to keep output at 28 million barrels per day (bpd).

"This market is like Dr Jeykll and Mr Hyde. It has a very high volatility and, short-term, there are plenty of inventories. However, the big concerns are Iran and Nigeria," Nunan said.

While the geo-political concerns are medium- long-term concerns, short-term sentiment is toward lower prices, Nunan said.

Western powers led by the United States want to curb Iran's nuclear activities amid fears that the country is aiming to develop nuclear weapons. Tehran has insisted its research is for peaceful purposes.

The country's Foreign Minister Manouchehr Mottaki threatened on Sunday that Iran could quit the nuclear Non-Proliferation Treaty, which governs the peaceful use of nuclear energy, if its nuclear rights were not acknowledged.

Iran is the world's fourth-biggest oil producer and the second-biggest exporter in OPEC, after Saudi Arabia.

In Nigeria, separatist rebels on Saturday rejected an appeal from tribal elders for them to release three Western oil workers and warned: "The hostages are going nowhere".

The continuing conflict between the separatist rebels and government forces has led to supply concerns following oil pipeline attacks which saw Anglo-Dutch giant Shell cutting its crude exports by almost 20 percent.

Nunan believes that this disruption will not affect the overall global crude supply in the short term. "Even if you get disruption in Nigeria, there is enough crude in storage for you to get by," he said.

AFP 03 12 06

Copyright © 2006 AFP. All rights reserved.

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