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Oil prices dip on potential Iran breakthrough
AFP
NEW YORK
Petroleumworld.com 04 27 07World oil prices slid Thursday on signs that Iran and the European Union have made progress in nuclear talks, traders said.
But losses were limited by market concerns over weak US gasoline reserves heading into the peak-demand season for motor fuel, when the driving season starts next month in the United States.
New York's main oil futures contract, light sweet crude for delivery in June, shed 78 cents to close at 65.06 dollars a barrel.In London, the price of Brent North Sea crude for June delivery fell 92 cents to 67.65 dollars a barrel.
" Crude futures were a little lower today in both London and New York, easing off after Iran's chief negotiator hinted that some common ground has been found between the EU and Iran," Sucden analyst Michael Davies said in London.
" The two parties are due to meet again in two weeks and there were suggestions that the differences between them are narrowing and this reduced some of the geopolitical risk premium on oil prices."
Iran is the world's fourth-largest oil exporter and traders fear Western pressure over its nuclear program could prompt the Islamic republic to cut crude exports in retaliation.
Iranian negotiator Ali Larijani said Thursday that talks with EU foreign policy chief Javier Solana had made progress towards a "united view" on ending the crisis over Tehran's refusal to halt uranium enrichment.
" I think in some areas we are approaching a united view and that is to say the best approach is to have the issue settled through negotiation," Larijani said after a second day of talks with Solana in the Turkish capital Ankara.
BMO Capital Markets analyst Bart Melek said: "I suppose that some of the geopolitical risk premium has been knocked out."
But he added: "I suspect that the market has run a little bit too high and that there has been some profit-taking. I don't think that fundamentally things have changed with Iran."
Davies also sounded a cautious note.
" We would argue that we have seen this sort of situation time and time again and that it remains unlikely that Iran will concede to the West's demands and give up nuclear enrichment," he warned.
The talks were the first face-to-face meetings between Larijani and Solana since the UN Security Council imposed a second round of limited sanctions on Iran in March to punish its continuing enrichment work.
Western nations fear that Iran is trying to make a nuclear weapon. But Iran contends that its nuclear program is for peaceful energy production.
Meanwhile, traders said oil prices were underpinned by weak US gasoline stocks ahead of the US driving season, which starts in four weeks.
The US Department of Energy had said Wednesday that motor fuel reserves sank by 2.8 million barrels in the week ending April 20.
That marked the 11th consecutive weekly drop for gasoline inventories and compared with market expectations for a lighter fall of just 500,000 barrels.
" If gasoline prices go higher, we could see bottlenecks in the system and much higher prices," Melek said.
AFP 26 1951 GMT 04 07
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