Oil Prices Fall on Gulf Storm Predictions
Monday, June 12, 2006; 4:07 PM
WASHINGTON -- Crude oil futures fell by more than $1 a barrel Monday as the first named storm of the Atlantic hurricane season was expected to steer clear of the Gulf of Mexico's petroleum infrastructure. Light trading volume exacerbated the move, analysts said.
But oil prices stayed above $70 a barrel and analysts said the longer-term direction of the market remains murky.
"It has really been trendless over the past few weeks. There are lots of cross-currents," said Man Financial broker Andrew Lebow, noting how concerns about geopolitics are being offset by global economic worries.
Alaron Trading Corp. analyst Phil Flynn said energy traders are having a difficult time sorting through mixed signals on inflation, U.S. gasoline demand and the U.N.'s diplomatic standoff with Iran.
"Until there's more clarity, there will be continued volatility," he said.
While tensions in the Middle East underpin high world oil prices, there was also a measure of relief on Monday that Iran had accepted some parts of a Western offer aimed at getting the country to halt its nuclear program. At the same time, the head of the U.N. atomic watchdog agency told a 35-nation meeting Monday he had made little progress in his probe of suspicious aspects of Iran's nuclear program.
Light sweet crude for July delivery declined by $1.27 to settle at $70.36 a barrel on the New York Mercantile Exchange, where gasoline futures fell by 2.85 cents to settle at $2.1243 a gallon.
July Brent crude on London's ICE Futures settled $1.55 lower at $68.93 a barrel.
Tropical Storm Alberto had maximum sustained wind near 70 mph, just below hurricane strength of 74 mph, the National Hurricane Center said, and it was expected to reach Florida on Tuesday.
Authorities issued a hurricane warning and called for evacuations along Florida's Gulf Coast.
Analysts said they expected little if any Gulf of Mexico production to be shut in.
Still, geopolitical worries will keep a floor under oil prices, said Victor Shum, an energy analyst based in Singapore with Texas-headquartered Purvin & Gertz.