SINGAPORE, AP – Crude oil prices retreated Monday as traders took profits following recent gains and amid easing worries about Iran’s nuclear dispute after the country’s top nuclear negotiator expressed optimism that the standoff can be resolved peacefully.
Light, sweet crude for August delivery fell 37 cents to $73.72 a barrel in Asian electronic trading on the New York Mercantile Exchange.
The drop came after oil prices had climbed for most of the last two weeks, reaching an intraday record of $75.78 a barrel on Friday before settling back at $74.09.
The Brent crude contract for August fell 27 cents to $73.24 a barrel.
“The drop in prices is more about profit-taking than anything else,” said Tobin Gorey, commodity strategist at Commonwealth Bank in Sydney. “We’re in the midst of the hurricane season, it would take a lot of courage for anyone to go seriously short now.”
Traders have been closely watching Gulf of Mexico weather reports as memories of last year — one of the most destructive hurricane seasons on record — continued to haunt traders. Hurricanes Katrina and Rita swept some offshore rigs from their moorings, shuttered production in the Gulf and damaged refineries in Louisiana and southeast Texas.
The oil market has been driven by increasing geopolitical tensions, particularly the ongoing nuclear standoff between the West and Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries. Some fear that sanctions imposed against Iran could prompt it to withhold some of its crude from the market.
Gorey said traders could also be reacting to comments by Iran’s top nuclear negotiator on Friday insisting the nuclear standoff can be resolved through dialogue.
“The Iranian nuclear issue is not so complicated that it cannot be solved through dialogue,” Ali Larijani told a news conference in Madrid after meeting with senior Spanish officials. He would not say when Iran might respond to the package of incentives offered by the world powers to persuade the country to cease uranium enrichment.
Gasoline futures on Monday fell 1.58 cents to $2.2263 a gallon while heating oil prices dropped 0.17 cent to $2.0087 a gallon.
Nymex natural gas futures gained 3.9 cents to $5.562 per 1,000 cubic feet after falling Friday to their lowest level in nearly two years as U.S. supplies in storage grew to roughly 30 percent above their five-year average.
The United States is awash in natural gas and some analysts believe there may not be enough underground storage capacity, potentially forcing some producers to shut wells. Others predict the falling price will spark demand and cause the supply overhang to be whittled away by fall.