MARKET WATCHOil prices drop as supply fears ease

April 3, 2006
Crude oil prices fell in New York and London Mar. 31 as supply concerns eased after Iran said it would not use oil as an economic weapon.

By OGJ editors
HOUSTON, Apr. 3 -- Crude oil prices fell on New York and London markets on Mar. 31 as supply concerns eased after Iran said it would not use oil as an economic weapon in its dispute with the United Nations over nuclear plans.

Iran's Foreign Minister Manouchehr Mottaki spoke with reporters during a 2-day visit to Geneva Mar. 30-31. He emphasized Iran would not give up its right to develop nuclear energy for civilian use, citing the Nuclear Non-Proliferation Treaty.

"We're not going to use energy as a political leverage," Mottaki said. "With regards to the nuclear fuel production, there are many solutions; one of them is forming a regional consortium for production of nuclear fuel."

He said Iran was prepared to continue dialogue, adding: "We consider talks as an appropriate channel and are prepared for that."

Elsewhere, world oil supply concerns also eased with reports that a damaged pipeline in Nigeria had been repaired and was operating again.

Italy's Eni SPA said it resumed regular activities at Tebidaba-Brass pipeline in the Niger Delta, which received damage from a Mar. 17 explosion. Eni blamed the blast on sabotage.

Energy prices
The New York Mercantile Exchange contract for benchmark US light, sweet crudes for May delivery ended 52¢ lower to $66.63/bbl Mar. 31. The June contract dropped by 40¢ to $67.93/bbl. On the US spot market, West Texas Intermediate lost 55¢ to $66.66/bbl.

Natural gas futures for May delivery on NYMEX declined by 2.77¢ Mar. 31 to settle at $7.21/MMbtu. This was the first decline in four sessions, prompted by rising temperatures, Enerfax Daily analysts said.

Gasoline for April delivery dipped by 4.99¢ to $1.9458/gal on NYMEX. Heating oil for the same month lost 2.25¢ to $1.8618/gal.

In London, the May IPE contract for North Sea Brent crude dropped by 55¢ to $65.91/bbl. Gas oil for April was down by $1 to $583/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained 53¢ to $61.17/bbl.