Monday, July 07, 2008
Oil prices drop below US$144 a barrel in Asia (12:47 p.m.)
KUALA LUMPUR, Malaysia -- Oil dropped below US$144 a barrel Monday in Asia on signs of easing tensions over Iran's nuclear program.
Iran on Friday gave an undisclosed response to an international offer of incentives if it suspends uranium enrichment, a central part of its nuclear program that can produce either fuel for a nuclear reactor or the material for a warhead.
A positive response could open the way to renewed negotiations that might help cool tense exchanges over the possibility of a military strike by Israel or the US on Opec's second largest oil producer. Traders worry such a strike could disrupt already tight oil supplies.
Iranian government spokesman Gholam Hossein Elhma said Saturday that Tehran was ready to negotiate on its program but indicated it would not halt uranium enrichment.
"The Iranian situation turned confrontational last week which raised valid concerns in the oil market (over a possible attack). Now that seems less likely and this is a positive development," said John Vautrain, an analyst with Purvin & Gertz in Singapore.
Iranian state media reported Friday that EU foreign policy chief Javier Solana and Iran's top nuclear negotiator, Saeed Jalili, have agreed to hold the latest in a series of talks in the second half of July.
Midday in Singapore, light, sweet crude for July delivery was at US$143.80 a barrel in electronic trade on the New York Mercantile Exchange, US$1.49 lower than Thursday's floor close.
The contract hit a trading record of US$145.85 on Thursday in New York before settling at a record close of US$145.29 a barrel. There was no floor trade Friday in the US due to the nation's Independence Day holiday.
Despite the retreat in prices Monday, the market remains bullish following comments by the head of the Organization of Petroleum Exporting Countries over the weekend, said Vautrain.
Opec President Chakib Khelil said that surging oil prices aren't likely to fall amid strong demand, especially from China and India.
Khelil also told an energy conference in Algiers on Sunday that the steady increases of late were unrelated to supply and demand, blaming the weak US dollar, oil's primary currency of exchange.
Khelil said he believes the reason the dollar has fallen against other currencies is the US decision to lower interest rates in an effort to boost the American economy.
A falling dollar has helped boost oil prices around 50 percent this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.
Oil prices are rising amid a drop in stock prices worldwide, with the major stock market indices all down by double digits since the start of the year.
In other Nymex trade, heating oil futures fell 5.08 cents to US$4.0552 a gallon (3.8 liters) while gasoline prices dropped 2.7 cents to US$3.544 a gallon. Natural gas futures lost 20 cents to US$13.377 per 1,000 cubic feet.
August Brent crude fell 2 cents to US$144.40 a barrel on the ICE Futures exchange in London. (AP) |
