VIENNA, Austria, AP – Crude-oil prices slipped below $70 a barrel Monday as a stagnating gasoline market temporarily pushed persistent worries about Iran’s nuclear ambitions into the background.
Crude futures lost more than $4 a barrel last week after U.S. government data showed an increase in gasoline supplies. But geopolitical concerns, including unrest in Nigeria, violence in Iraq and rising resource nationalism in South America, still underpin oil prices.
The most pressing source of anxiety stems from the possibility that Iran, OPEC’s No. 2 producer, could cut supplies because of international pressure to modify its nuclear program. Still on Monday, the market chose to react to increased gasoline stocks and lessened demand due to high prices.
Vienna’s PVM Oil Associates attributed “stagnating demand and higher production rates” for the build in U.S. gasoline stocks revealed last week.
“In the short run, slower demand, coupled with higher production and lower crude prices should bring (gasoline) retail prices down,” even as concerns over Iran and South America — where Bolivia, Venezuela and Ecuador’s energy nationalism continues to fuel crude and natural gas markets — continue, it said.
Light, sweet crude for June delivery fell 68 cents to $69.51 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.
June Brent crude futures on London’s ICE Futures shed 52 cents, selling at $70.43 a barrel.
Gasoline futures fell by more than a penny to $2.0300 a gallon while heating oil prices slipped more than a cent to $1.9416 a gallon. Natural gas prices lost 7 cents to sell at $6.701 per 1,000 cubic feet.
Claude Mandil, executive director of the International Energy Agency, told reporters at an Australian oil and gas conference Monday that crude prices will have to come down, adding that even producers aren’t happy with surging prices.
“The current prices aren’t sustainable,” Mandil said.
“The high oil prices are not consistent with the long-term trend just because they are much higher than the margin costs of an additional barrel,” he said.
Still, upward pressures loomed. On Sunday, Iran renewed its threat to withdraw from the Nuclear Nonproliferation Treaty, with its president saying sanctions would be “meaningless” and its parliament seeking an end to unannounced inspections of its nuclear facilities.
President Mahmoud Ahmadinejad said he would not hesitate to reconsider membership in the treaty, speaking as Washington and its allies pressed for a U.N. Security Council vote to suspend Tehran’s uranium enrichment program.
The U.S. is backing attempts by Britain and France to win Security Council approval for a U.N. resolution that would threaten possible further measures if Iran does not suspend uranium enrichment — a process that can produce fuel for nuclear reactors to generate electricity or, if sufficiently processed, to make atomic weapons.
The U.S. ambassador to the United Nations, John Bolton, said he believed the resolution would move to a vote this week, with or without support from Moscow and Beijing.
Other concerns affecting the market include some 500,000 barrels per day of Nigerian production, most of it operated by Royal Dutch Shell PLC, that remains off-line because of violence there, and more than 300,000 barrels per day still shut down in the Gulf of Mexico since Hurricane Katrina battered offshore platforms in August.
Strong global demand and a limited supply cushion magnify the significance of these events, while a surge of investors betting on oil and other commodities has also lifted prices — which have fallen more than $5 from their intraday peak of $75.35 reached April 21 on the Nymex but remain roughly 40 percent higher than a year ago.