Oil prices fell Monday, but clung above $69-a-barrel levels amid lingering worries over Iran’s nuclear ambitions, and how that might affect oil supplies.
Vienna’s PVM Oil Associates spoke of “a possible export outage by Iran” continuing “to dominate markets,” while noting that high retail prices for oil-related products appeared to be containing demand _ a finding also touched on in OPEC’s latest snapshot of the crude market.
While noting a surge in worldwide economic output of around 15 percent over the past three years,” this robust economic performance, with some exceptions, has not been reflected by commensurate growth in oil demand,” the Organization of Petroleum Exporting Countries said in its monthly oil market report.
Production from OPEC nations dropped slightly to just under 29.5 million barrels in May with oil powerhouse Saudi Arabia reducing output, the report noted.
The report raised forecast demand for OPEC oil by 200,000 barrels a day to 28.6 million barrels daily for the last quarter of the year.
Light, sweet crude for July delivery fell 60 cents to $69.28 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe.
Brent futures for August were down 67 cents and fetching $68.13 on London’s ICE futures exchange.
On Sunday, Iran accused the United States of steering Europe away from a possible compromise over the issue. Foreign Ministry spokesman Hamid Reza Asefi said America’s insistence on conditional negotiations over a Western incentive package has narrowed the scope of potential talks and made it tougher for all parties to reach a solution.
Asefi reiterated that enriching uranium was his country’s unalienable right, and that no conditions should be placed on the talks. He said Iranian officials were reviewing the package, and Iran would propose amendments to the deal.
“If there’s some resolution in the Iranian issue, prices will come down,” said Lorraine Tan, director of research at Standard & Poor’s Equity Research in Asia.
Meanwhile, crude prices are likely to stay in the $65 to $70 a barrel range in the short term, Tan said.
“The current prices do reflect the geopolitical risks,” Tan said. “There’s always been a problem of excess capacity as supply and demand is in a fine balance.”
In other trading, gasoline futures fell nearly 3 cents to $2.0095 a gallon, while heating oil slipped more than a cent and a half to $1.9170 a gallon. Natural gas prices fell 30 cents to $6.880 per 1,000 cubic feet.