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Oil Prices Slide To Near Six-Month Lows

Eugene Peroni at Claymore Securities said the fall below 67 dollars was key because prices dropped below their 200-day moving average for the first time since March.
by Staff Writers
New York (AFP) Sep 11, 2006
World oil prices fell to their lowest points since late March on Monday amid easing concerns over Iran's nuclear program and after the OPEC oil-producing cartel pledged to keep output steady. New York's main contract, light sweet crude for delivery in October, dropped 64 cents to close at 65.61 dollars a barrel.

It earlier hit 64.85 dollars -- the lowest point since March 28 and more than 17 percent below its historic high of 78.40 dollars reached on July 13.

In London, Brent North Sea crude for October delivery settled down 78 cents at 64.55 after striking an intra-day low of 63.97 -- the lowest point since March 28. Brent had struck an all-time high 78.64 dollars only on August 7.

"The perception of downgraded geopolitical and weather risks elicits few reasons to step in and buy, so prices continue to retreat," said Mike Fitzpatrick at Fimat USA, citing dimished fears about a crisis over Iran's nuclear program and also about a disruption to supplies from hurricanes.

Analysts said selling appeared to be accelerating as prices fall through key support levels. This can prompt speculators who had bet on higher prices to pull out of the market.

Eugene Peroni at Claymore Securities said the fall below 67 dollars was key because prices dropped below their 200-day moving average for the first time since March.

"The decline from July's peak level near 78 dollars has been swift and sharp," Peroni said.

"This has led to 'fast money' exiting most energy stocks in recent weeks. It may be premature to proclaim oil in a confirmed long-term downtrend ... That said, there is a substantial structure of resistance in the low/mid 70s making passage beyond that point unlikely anytime soon."

In Vienna, OPEC ministers decided after a meeting Monday to maintain their policy of stabilizing the market with an output ceiling of 28 million barrels per day but said they were ready to respond to sharp price changes.

Qatari Energy Minister Abdullah bin Hamad al-Attiyah said the production quota implemented by the Organization of the Petroleum Exporting Countries would continue unchanged for now.

Fitzpatrick said the OPEC comments were "somewhat supportive" for prices but unable to "temper the ongoing wave of selling interest. Still, if prices continue to drop, there will be increasing speculation about what price, if any, the organization is going to defend."

Traders remained heavily focused on Iran, the world's fourth biggest producer of crude.

On Monday, a Western diplomat told AFP that top Iranian nuclear negotiator Ali Larijani set a list of conditions, including no UN actions against Tehran, in offering to consider a two-month suspension of uranium enrichment.

"He had a long list including (a) complete and total halt in activity at the UN Security Council, an absolute stepping down from going for sanctions and that Iran would have the right to nuclear fuel technology on its soil," the diplomat said.

Iran faces the threat of UN economic sanctions for defying a UN Security Council August 31 deadline for it to freeze its strategic nuclear fuel work.

Analysts warn that Iran could retaliate against sanctions by disrupting its oil exports. But in the absence of sanctions, crude futures are tumbling.

Prices were easier also Monday in view of a mild US hurricane season and a recent announcement by British energy giant BP that oil production at its Alaskan Prudhoe Bay facility could be fully restored by the end of October, dealers said.

An August pipeline leak forced BP to shut down much of its production at the vast oil field, sparking a temporary oil price rally.

Source: Agence France-Presse

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Adelaide, Australia (AFP) Sep 11, 2006
Predictions that global oil supplies will soon run dry are wrong and crude will remain the main energy source well into the future, ExxonMobil Australia chairman Mark Nolan said Monday. Nolan told the Asia Pacific Oil and Gas Conference here that the oil industry had to counter perceptions a world oil shortage was imminent to ensure politicians adopted sound long-term policies on energy issues.

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