HOUSTON, May 9 -- Energy prices continued to slump May 8 on market hopes that a letter from Iranian President Mahmoud Ahmadinejad to US President George W. Bush might ease political tensions between the two countries.
But the first direct communication from an Iranian leader in 27 years contained only an oblique reference to Iran's nuclear intentions and instead blasted the Bush administration, the US, and democracy. Sec. of State Condoleezza Rice rejected the letter as not resolving any of US and European concerns about Iran's suspect nuclear program.
Meanwhile, Claude Mandil, executive director of the International Energy Agency in Paris, said world demand for crude is expected to grow to 99 million b/d in 2015 from 82 million b/d in 2004. Speaking at an energy conference in Australia, Mandil said refineries around the globe must be upgraded to process heavier oils coming onto the market. The industry is likely to have no spare refining capacity by 2010, he said.
The June contract for benchmark US sweet, light crudes declined by 42¢ to $69.77/bbl May 8 on the New York Mercantile Exchange. The July contract lost 59¢ to $71.31/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 42¢ to $69.78/bbl. Gasoline for June delivery dipped by 3.7¢ to $2/gal on NYMEX. Heating oil for the same month slipped by 0.16¢ to $1.95/gal.
It was "a relatively flat day for the markets, with some morning volatility," and it likely signals "more of the same over the next few weeks," said analysts in the Houston office of Raymond James & Associates Inc.
The June natural gas contract retreated by 7.9¢ to $6.70/MMbtu on NYMEX, due to "lack of demand across much of the nation," said analysts at Enerfax Daily. However, above-normal temperatures are expected for most of the US later this month and through July.
In London, the June IPE contract for North Sea Brent crude fell by 74¢ to $70.21/bbl. The May gas oil contract dropped $8.75 to $603.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 47¢ to $64.54/bbl on May 8.
Contact Sam Fletcher at [email protected].