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Oil prices tumble as traders eye stock market slide
AFP
NEW YORK
Petroleumworld.com 06 11 07World oil prices tumbled Friday as traders took profits following a downturn in global equities markets this week that prompted concerns about economic growth and energy demands.
New York's main oil futures contract, light sweet crude for delivery in July, sank 2.17 dollars to close at 64.76 dollars per barrel.
In London, Brent North Sea crude for July delivery skidded 2.62 dollars lower to settle at 68.60 dollars per barrel.
The US stock market suffered a sharp three-day selloff this week, losing nearly three percent of its value, as investors shifted way from expectations of a rate cut by the Federal Reserve to a possible rate hike. Stocks also stumbled in Asia and Europe.
"With all the talk of rising interest rates finally killing the stock market, participants are justifiably concerned about energy demand growth," Mike Fitzpatrick of Man Financial said.
Analysts also attributed the fall in prices to profit taking after New York's bellwether crude hit 67.42 dollars per barrel Thursday, its highest level since March 27.
Another factor helping ease prices was the diminishing threat from Cyclone Gonu in the Middle East. On Thursday prices jumped as traders fretted over tight US gasoline supplies and tracked Cyclone Gonu's progress in the Middle East.
"Crude futures were lower (on Friday), coming off after strong recent gains after Cyclone Gonu lost its power and Oman announced it resumed operations at its 650,000 barrels-per-day oil terminal," said Sucden analyst Michael Davies.
Gonu, which tore through Oman this week before weakening towards Iran, killed scores of people and left others missing in the Gulf sultanate, police said Friday.
Although the storm had raised fears about oil shipments in the Strait of Hormuz, through which about one quarter of the world's crude supplies pass, officials said shipping had not been affected.
Meanwhile, another kidnapping in Nigeria's oil-rich southern region renewed concerns about stability in Africa's second-biggest oil producer, after Nigeria.
Gunmen late Friday kidnapped a Lebanese man in Port Harcourt, police said. The man is a manager with Modant Marine, a shipyard service company operating in the Niger Delta.
The delta, home to Nigeria's multi-billion-dollar oil industry, has seen an upsurge in violence and hostage-takings by militant groups in the past year.
Some 190 foreigners, mostly in the oil sector, have been abducted. Most of them have been released after spending days and even weeks in captivity.
Man Financial's Fitzpatrick pointed to the "geopolitical picture that hums constantly in the background."
"There seems to be myriad permutations of events in the Middle East, whose ultimate consequence or corollary results in disruption of oil supplies," he said.
Earlier this week, crude benefited from geopolitical tensions amid an unfounded report that Turkey had sent thousands of troops into Kurdish-controlled northern Iraq to dislodge a rebel stronghold.
AFP 08 2035 GMT 06 07
Copyright© 2007 AFP. All Rights Reserved.
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