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World oil prices fall from record peaks
AFP
NEW YORK
Petroleumworld.com 07 11 06
World oil prices declined Monday from last week's record peaks, on profit-taking caused by easing concerns over Iran, analysts said.
New York's main contract, light sweet crude for delivery in August, closed down 48 cents at 73.61 dollars per barrel.
The contract had struck a historic 75.78 dollars in intraday trade Friday owing to simmering geopolitical tensions, particularly over Iran and North Korea.
In London meanwhile, Brent North Sea crude for August delivery settled with a loss of 62 cents at 72.89 dollars per barrel on Monday. It had touched a record 75.09 dollars on Friday.
"Prices gave back some of their recent gains on some optimism over the Iranian nuclear dispute," Barclays Capital analyst Kevin Norrish said in London.
He added that markets reacted positively to comments by EU officials describing last Thursdays meeting between European Union foreign policy chief Javier Solana and Iran's top atomic nuclear negotiator Ali Larijani as constructive and representing a good start for the further set of negotiations on Tuesday.
Solana had stressed that the Islamic republic was "serious" about defusing the standoff.
Norrish, however, added Monday "that such optimism is bound to be shortlived, and we expect geopolitics, and the Iranian dispute, in particular, to remain a key supportive factor for prices".
John Kilduff, an energy analyst at Fimat USA in New York, said the "positive impression" of Thursday's meeting between Solana and Larijani had cooled prices.
"It must also be tempting to sell when there is little follow through off record prices, and that appears to be the major impetus for participants," Kilduff said.
The dispute between Iran -- the world's fourth-largest crude producer -- and Western powers over its nuclear programme is a key geopolitical factor concerning the market.
Iran had said on Sunday that it would take until the second half of August to respond to an international offer of incentives in return for the suspension of sensitive nuclear work.
The United States has meanwhile threatened UN action against the Islamic republic if it fails to heed international concerns. Analysts argue that such punishment could lead to Iran retaliating by halting its oil exports.
Tehran is facing mounting international pressure to give a clear answer before the Group of Eight (G8) summit from July 15-17.
Another worry for traders is North Korea, which has kept the market on tenterhooks.
Although the Asian power is not an oil producer, its controversial missile tests last week rattled international tensions.
North Korean leader Kim Jong-Il vowed no compromise and said he was braced for "all-out war" as tension mounted Sunday before an expected UN vote on whether to impose sanctions on the communist state for its missile tests.
However, the UN Security Council on Monday put off a vote on a draft resolution that would slap sanctions on North Korea over its missile tests, to allow more time for Chinese diplomatic efforts to defuse the crisis.
The Kyodo News agency quoted Japanese Chief Cabinet Secretary Shinzo Abe as saying Tokyo and Washington had agreed to postpone the UN vote "for several days."
Oil prices maintained some support from strong demand for motor fuel in the United States amid the ongoing driving season when many Americans hit the road on vacation.
"With each passing week of the driving season without a major refinery glitch or a tropical storm bubbling up out in the Atlantic, the (gasoline) supply shortage theme will recede a bit," Kilduff said.
"However, (if) either of those two elements appear on the market's radar, prices will reverse dramatically upward," he cautioned.
AFP 101956 GMT 07 06
Copyright ©2006 AFP. All Rights Reserved.
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