LONDON, AP -Oil prices rose Wednesday following news that Iran will not respond immediately to incentives meant to resolve an international dispute about its nuclear program.
Also on Wednesday, an outlook by the International Energy Agency nudged its forecast for world oil demand growth for this year to its lowest level yet, but also forecast a rebound in demand growth next year.
Traders also hope to get clues about supply levels from the U.S. Energy Department’s weekly inventory report Wednesday. Analysts surveyed by Dow Jones Newswires expect the report to show a drop of 1.4 million barrels in U.S. crude stocks and a seasonal decline of 500,000 barrels in commercial gasoline inventories.
Light sweet crude for August rose 18 cents to $74.34 per barrel in electronic trading on the New York Mercantile Exchange. It had risen 55 cents Tuesday to $74.16 after Iran’s top nuclear negotiator ruled out an immediate response to an international offer of incentives to suspend suspected nuclear activity.
August Brent rose 14 cents to $73.81 a barrel on the ICE Futures exchange.
Iran’s chief nuclear negotiator, Ali Larijani, said after meeting with the European Union’s Javier Solana in Brussels on Tuesday that the “ambiguities must be removed first in order to have serious talks.”
His comments dampened hopes that Tehran would quickly respond on whether it will meet a Wednesday deadline and accept the international offer.
Iran is OPEC’s second-largest producer, and fears that the dispute could disrupt supplies have been a factor in pushing oil prices higher.
“The Iranians are playing hardball, their statement shows that they’re not flexible,” said Mike Guido of Societe Generale. “You now have to assume that there is going to be a move toward sanctions, which makes it difficult to hold short exposure in the near term.”
The IEA, meanwhile, trimmed its growth forecast for this year to 1.21 million barrels a day, but in its first outlook for 2007 it estimated demand would grow by 1.57 million barrels a day to a total of 86.37 million barrels a day.
The energy watchdog also said oil demand is expected to increase by 2 percent per year in the next five years. Supplies are also expected to increase, but the IEA saw little prospect for significant price cuts.
“Without seeking to anticipate the geopolitical context, this (projected) level of spare capacity may not have a significant impact on prices,” the IEA said.
Heating oil futures fell less than half a cent to $2.0075 a gallon while gasoline prices lost nearly a cent to $2.2002 a gallon. Natural gas futures gained 2 cents to $5.650 per 1,000 cubic feet.