Oil Prices Ease as Demand, Risk Fall
Crude Hits 15-Week Low as U.S. Travel Season Wraps Up
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Tuesday, September 5, 2006
Crude oil prices fell to a 15-week low in New York yesterday as the U.S. summer travel season ended and traders speculated that a dispute with Iran about nuclear research may be resolved without curtailing exports.
Iran, the world's fourth-largest oil producer, wants a negotiated solution to a demand that it stop enriching uranium, United Nations Secretary General Kofi Annan said yesterday.
U.S. gasoline use usually rises 5 percent in the summer, then drops after Labor Day.
"A lot of risk premiums haven't materialized," said Tom Hammervold, an oil trader at Norsk Hydro ASA in Oslo. "There are no issues at the moment to support the price."
Crude oil for October delivery fell $1.17, or 1.7 percent, to $68.02 a barrel in electronic trading on the New York Mercantile Exchange, the lowest for a contract closest to expiration since May 22. New York crude touched $67.77 a barrel earlier in the day. Floor trading on the exchange was closed yesterday for the holiday.
Gasoline prices also fell, with the October contract dropping 3.44 cents, or 2 percent, to $1.70 a gallon. The average U.S. retail price for gasoline declined to $2.74 a gallon on Sept. 3 from $3.02 a month earlier, according to AAA.
The price of oil has fallen 13 percent since reaching a high of $78.40 a barrel on July 14. Oil rose then on concern that fighting between Israel and Lebanon's Hezbollah would spread and disrupt supplies of crude from the Middle East.
Futures tumbled 4.6 percent last week, when a United Nations deadline for Iran to stop enriching uranium passed without sanctions being imposed.
Also, Tropical Storm Ernesto swerved north into Florida, leaving intact the oil and gas infrastructure in the Gulf of Mexico, the source of a quarter of U.S. oil production.
"The mixed signals and messages will continue, with someone saying Iran will stop exports and another saying exports will continue," said Antoine Halff, a vice president and head of energy research at Fimat USA Inc. in New York.
"Iran has a strong advantage in using oil as a weapon."
