Oil Prices Recover in Asian Trading

Gasoline prices are displayed at a BP/Amoco station in St. Louis with the St. Louis Gateway Arch in the background, in this Aug. 28, 2006 file photo. It wasn't long ago when U.S. motorists gritted their teeth at the prospect of $2 a gallon. And while it might be a welcome relief right now, most analysts say getting back to that level anytime soon is unlikely and would entail a major slowdown in the economy, if not a downright recession. A more likely scenario, these analysts said, is that retail gasoline prices will slide to about $2.50 a gallon by winter _ and then head higher again early next year. Still, even a temporary reprieve from soaring energy prices will be a balm for consumers, especially as the economy continues to cool. (AP Photo/James A. Finley) (James A. Finley - AP)

SINGAPORE -- Oil futures rose Tuesday as some traders bought up contracts after the price plunged by more than a dollar in the previous session, but they still hovered below $69 a barrel.

The market remained wary about how the Atlantic hurricane season and the Iranian nuclear standoff might affect supplies.

"Some traders took the opportunity to buy contracts since the price has fallen quite a bit since Friday," said Victor Shum, energy analyst with Purvin & Gertz in Singapore. "This is probably an indication that the market may not fall beyond current levels unless some bearish event occurs."

Brent crude for October delivery rose 41 cents to $68.12 a barrel on the ICE Futures exchange in London. The contract settled Monday at $67.71 a barrel, down $1.44 a barrel.

In electronic trading on the New York Mercantile Exchange, light, sweet October crude fell 74 cents from Friday's close to $68.45 a barrel. The contract closed Friday at $69.19 a barrel _ its lowest settlement price since finishing at $68.94 on June 20.

The Nymex did not set an official closing price Monday as floor trading was closed for the U.S. Labor Day holiday, while electronic trading continued. New York floor trading was scheduled to resume later Tuesday.

Crude oil prices started to fall Friday after the United Nations failed to impose sanctions on Iran for its refusal to cease enriching uranium and a more-subdued forecast for this year's Atlantic hurricane season.

But Shum said that while the market generally did not expect any major developments in the Iranian situation, persistent worries over the hurricane season in particular continued to support prices, despite hurricane forecasters downgrading their expectations for the storm season. A team based at Colorado State University called for a slightly below-average year, with only five hurricanes instead of the seven previously forecast.

"The weather remains an unpredictable factor; hurricanes could therefore be a flash-point for the oil market in the near term, even though various weather forecasters have changed their forecasts recently for the season to be somewhat milder," Shum said. "With Iran, however, the market generally expects the situation to drag on and not escalate."

Iran, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, defied the U.N. Security Council's Thursday deadline to halt its nuclear program. Traders have been worried that Iran might block oil exports if punished by the U.N. At this point, though, American officials and others say no action will be sought before a key European diplomat meets with Tehran's atomic energy chief this week to seek a compromise.

Also helping to ease energy prices in recent days were strong U.S. petroleum inventory data and a mixed U.S. jobs report _ suggesting fuel demand probably won't surge sharply.

Heating oil futures added 0.83 cent to $1.9485 a gallon while gasoline gained 1 cent to $1.7100 a gallon. Natural gas prices rose marginally to $5.831 per 1,000 cubic feet.