Oil prices steady

Oil prices steady

World oil prices have stabilized amid a broad recovery for commodities as economic concerns subsided over the threat of rising inflation, analysts said.

New York’s main contract, light sweet crude for delivery in July, added 20 cents to 69.70 dollars per barrel in electronic deals before the official opening of the US market.

In London, Brent North Sea crude for August delivery slid five cents to 68.40 dollars per barrel in electronic trading. The July contract expired Thursday at the close.

Crude futures have rebounded by almost one dollar since Wednesday, erasing much of the losses sustained during the previous eight days.

“The broad commodity recovery continued (on Friday) as concerns about inflation and slower demand growth faded,” Sucden analyst Sam Tilley said.

Investor worries had eased following comments from
Federal Reserve chairman Ben Bernanke that inflation expectations have “fallen back somewhat”, Tilley added.

Most global commodities have suffered heavy losses over the past month, prompted by fears that central banks may hike interest rates to combat rising inflation, thereby crimping growth and demand.

However, traders seized this week on news of sharp oil demand growth in the United States and China — respectively the first and second-biggest crude consumers in the world.

The US and China together consumed 27.6 million barrels per day of crude oil in 2005, accounting for one third of total global demand, British energy giant BP had said in an annual review published Wednesday.

And the world’s appetite for energy is set to increase in 2006, according to data issued by the International Energy Agency (IEA).

The IEA predicted Tuesday that global oil demand growth this year would stand at 1.5 percent or 1.24 million barrels per day.

“The market remains supported on the fact that demand for crude and oil products remains firm and the onset of this year’s hurricane season,” Tilley added.

Earlier this week, crude prices fell as the first tropical storm of the 2006 Atlantic Hurricane season, Alberto, appeared on course to avoid US energy installations in the Gulf of Mexico.

Nevertheless, traders are fearful that this year’s hurricane season — which began on June 1 and lasts until the end of November — could be another fierce one.

“Geopolitical problems including
Iran and Nigeria are also providing support,” Tilley said, noting that the mood remained “cautious” following the recent sell-off.

A senior Iranian official said Friday that there were “positive points” in offers from world powers aimed at a compromise on Tehran’s nuclear program and is ready to discuss them but talks need to begin without preconditions.

“Negotiations must be without preconditions,” Iranian Deputy Foreign Minister Abbas Araqshi said.

Iranian officials have made clear that the country is not prepared to stop enriching uranium as a precondition for entering talks with six world powers, including the United States, on a package of incentives aimed at encouraging Iran to forego highly sensitive nuclear work.

Iranian leader Ayatollah Ali Khamenei had said Thursday in Tehran that his country would not succumb to pressure over its atomic program, implicitly rejecting international calls to suspend nuclear enrichment.

The market fears that Iran, the world’s fourth largest crude producer, could cut exports if UN sanctions were imposed to force it to stop uranium enrichment.


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