Reuters: Oil rebounded on Friday as worries over Iran’s nuclear row with the West resurfaced, after prices slumped to the lowest level in nearly two months on healthy fuel stocks in top consumer the United States. By Neil Chatterjee
SINGAPORE, Aug 18 (Reuters) – Oil rebounded on Friday as worries over Iran’s nuclear row with the West resurfaced, after prices slumped to the lowest level in nearly two months on healthy fuel stocks in top consumer the United States.
U.S. light, sweet crude for September delivery
U.S. Undersecretary of State Nicholas Burns said on Thursday he expected the U.N. Security Council would “take up its responsibilities” and impose sanctions if Tehran did not stop its enrichment programme.
Iran’s President Mahmoud Ahmadinejad said earlier on Thursday Iran could not abandon its nuclear programme while the United States was developing new atomic bombs every year, the semi-official Mehr news agency reported. Traders fear Iran could retaliate to potential sanctions by disrupting oil flows.
Crude prices have still shed more than 7 percent after falling for six of the previous eight sessions as a ceasefire took hold in the Middle East and BP
Traders had feared the supply loss from the biggest oilfield in the U.S. might lead to a large drop in crude inventories in the world’s largest oil market , but data on Wednesday showed a decline of 1.6 million barrels, in line with forecasts.
Crude stocks have fallen from the eight-year high reached earlier this year, but remain higher than almost any time since 1999, giving refiners a sizeable supply buffer to guard against any unexpected disruptions.
Producers cartel OPEC will not cut production or formally return to its quota system for at least the rest of 2006 as it works to stabilise oil prices, the group’s president Edmund Daukoru said Thursday.
“I don’t see a return to quotas or cutting back in production for this year at least,” Daukoru told reporters.
“We will continue to produce to show the market there is an excess in production and that high prices are more a result of limits in refining capacity.”
Prices of other commodities also slid on Thursday, with copper losing 3 percent and gold more than 2 percent.
“A synchronised fall can be a coincidence but in these days where fund managers have large amounts invested in commodity markets that may not be the case,” said Tobin Gorey of the Commonwealth Bank of Australia.
“Some investors will probably be sitting on substantial profits.”
Crude prices have also dropped this week as fears of a wider conflict in the Middle East eased after a ceasefire between Israel and Hizbollah moved into a fifth day on Friday. The United Nations has received substantial offers of peacekeeping troops for Lebanon.
But the risk of hurricanes affecting U.S. oil production in the Gulf of Mexico and disrupted supplies from OPEC-producer Nigeria continue to provide support.
A Lebanese worker was kidnapped in Nigeria on Wednesday, part of a wave of militant attacks that have slashed its output.