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Crude Prices Slip As Hurricane Fears Fade

On Wednesday, oil prices reached 77.47 in London and 76.50 in New York -- the highest levels since July 18.
by Staff Writers
London (AFP) Aug 03, 2006
World oil prices fell on Thursday as concerns eased about a tropical storm off the US Gulf coast, where many American oil rigs and platforms are based, and hopes increased for an end to fighting between Israel and Lebanon, analysts said. New York's main contract, light sweet crude for delivery in September, dropped 91 cents to 74.90 dollars per barrel in pit trading.

In London, Brent North Sea crude for September delivery lost 67 cents to 76.22 dollars per barrel in electronic deals.

It is the first fall in four days following gains of 4.8 percent in London and 3.5 percent in New York between Monday and Wednesday.

Crude futures had spiked on Wednesday as traders fretted over the threat of hurricanes in the US Gulf of Mexico. Oil prices reached 77.47 in London and 76.50 in New York -- the highest levels since July 18.

But crude futures fell Thursday "on market perceptions of an easing in the threat posed to Gulf of Mexico oil operations by Tropical Storm Chris and also as momentum appears to be building for concerted action on the part of the US, France and Britain to back a truce in southern Lebanon", Barclays Capital analyst Kevin Norrish said.

Tropical Storm Chris has weakened north of Puerto Rico, the National Hurricane Center in Miami said Thursday.

At 1200 GMT, the Atlantic season's third tropical storm was losing momentum and was on the verge of being downgraded to a tropical depression.

Traders meanwhile kept watch over events in the Middle East.

An agreement to end the conflict in Lebanon could be just days away, British Prime Minister Tony Blair said Thursday as he faced a barrage of questions about his position on the crisis during a press conference in London.

"The US, the UK, France and others have been working very hard to get agreement on a United Nations resolution, and I am now hopeful that we will have such a resolution down very shortly and agreed within the next few days," he said.

"The purpose of that will be to bring about an immediate ceasefire and then put in place the conditions of the international force to come in, in support of the Lebanese government, so we get the underlying issues and problems dealt with."

The news helped to push prices lower, a day after heavy gains that were caused by data that revealed falls to US crude oil and gasoline reserves last week.

Elsewhere, traders remained mindful of news from Nigeria, Africa's biggest crude producer, where output has been slashed by around 675,000 barrels per day, or 26 percent, by rebel attacks and a pipeline leak.

Oil market participants also kept an eye on Iran, which is the world's fourth-biggest crude producer.

The Islamic republic is facing a UN deadline to halt uranium enrichment by August 31 or have sanctions imposed. Traders fear sanctions might lead to severe disruptions to global oil supplies.

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