Oil prices rose back near $72 a barrel on Monday, rebounding from declines the week before, after Iran insisted ahead of an official response to a package of incentives on its nuclear programme that it will not suspend uranium enrichment.
Prices also appeared underpinned by concerns about supply disruptions in Nigeria due to civil unrest and fear of potential hurricanes that could strike Gulf of Mexico refineries. Traders were also watching for signals of where fuel demand is headed in the wake of BP’s production woes at its Prudhoe Bay field in Alaska.
Light, sweet crude for September delivery rose 81 cents to $71,95 a barrel by afternoon in Europe on the New York Mercantile Exchange. October Brent on London’s ICE Futures Exchange gained 86 cents to $73,16 a barrel.
Heating-oil futures jumped by more than three cents to $2,0234 a gallon and gasoline futures were steady at $1,9676 per gallon (3,8 litres). Natural gas futures fell six cents to $6,670 per 1 000 cubic feet.
Iran has said it will respond by Tuesday to the incentive offer, but insisted on Sunday that it will not suspend uranium enrichment altogether.
Speaking after Iran’s military test-fired 10 short-range missiles, foreign ministry spokesperson Hamid Reza Asefi said a nuclear compromise will have to be reached during future negotiations.
”Everything has to come out of negotiations,” Asefi said. ”Suspension is not on our agenda.”
The United Nations Security Council passed a resolution last month calling for Iran to suspend uranium enrichment by August 31 or face the threat of economic and diplomatic sanctions.
”It is very difficult to decide what to do now in this situation,” said Koichi Murakami, an analyst with brokerage Daiichi Shohin in Tokyo. ”Iran is very unlikely to accept [the UN’s package], which is supportive for prices. On the other hand, supply concerns [at Prudhoe Bay in Alaska] have eased, which put downward pressure on prices.”
Elsewhere in the Middle East, a ceasefire in Israel and Lebanon was in its seventh day, although Israel on Saturday conducted a pre-dawn commando raid deep into Lebanon’s eastern Bekaa Valley, prompting UN Secretary General Kofi Annan to declare the Israelis in violation of the Security Council truce resolution.
Oil prices had hit a record high of $78,40 a barrel on July 14, two days after fighting erupted in Lebanon.
They fell back last week as supply fears abated after the ceasefire in Lebanon and BP plc restored half of the production at the Prudhoe Bay oil field. On Friday, prices dipped below $70 a barrel during day trading for the first time in almost two months before regaining ground and closing at $71,14.
Still, PVM Oil Associates in Vienna said the Prudhoe outage is ”expected to leave its mark on US crude inventories” when they are published Wednesday. — Sapa-AP