Oil prices continue falling

Oil prices continue falling

Tuesday, August 15th 2006

World oil prices slipped lower as a fragile truce between Israel and Lebanon entered its second day.

In London, Brent North Sea crude for September delivery fell 22 cents to 74.08 dollars per barrel in electronic trading.

New York’s main contract, light sweet crude for delivery in September, slid 18 cents to 73.35 dollars per barrel in electronic deals before the official opening of the US market.

Crude futures had fallen sharply on Monday after a UN-brokered ceasefire deal took hold between Israel and Hezbollah, and on news that BP would maintain half of its output in a key Alaskan oil field, dealers said.

“The market is steady (on Tuesday), having adjusted downwards due to the generally good news with the ceasefire in the Middle East and also the Prudhoe Bay production being shut down by only about 50 percent,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

“The beginning of the week has been marked by calming news so that has taken the steam out of the market.”

There had been fear that the hostilities in Lebanon might drag other Middle Eastern countries into a wider conflict in the region and disrupt global supplies of crude oil.

Meanwhile, BP’s announcement late Friday that it would continue to pump oil from part of a giant field in Alaska, where a corroded pipeline sprang a leak the week before, has also calmed oil prices.

The British energy giant said it would resume production in the western part of Prudhoe Bay and continue pumping around 150,000 barrels per day, rising to 200,000 barrels, or around half its usual capacity, by the end of August.

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