LONDON (Reuters) -Oil slipped below $65 on Tuesday as the short-term prospect of rising stocks in the world’s biggest consumer the United States pushed longer term worries over Iran’s oil exports into the background.
British Prime Minister Tony Blair said fears of a spike in the oil price should not stop the international community imposing sanctions on Iran, the world’s fourth biggest oil exporter, over its nuclear program.
Despite Blair’s remarks U.S. crude slipped 70 cents to $64.41 a barrel by 1244 GMT. London’s Brent traded down 69 cents to $62.64.
Oil has shed five percent of its value this week as investors await the next development in Iran’s dispute with the United Nations’ nuclear watchdog and violence eases in Nigeria, the world’s number eight oil exporter.
“What people are feeling is that Iran is a longer-term issue,” said Justin Smirk, senior economist at Westpac.
“The risk to supply is much further out and is still somewhat unclear. The focus is on the now, and inventory rises continue to suggest an easing in tightness, not just week to week, but also month to month.”
A Reuters poll of analysts said U.S. data on Wednesday would show a 1.6 million barrel rise in gasoline stocks week-on-week and an 800,000 barrel build in crude.
U.S. gasoline futures fell 1.92 cents to $1.6250 a gallon as the market grew more confident the United States would be well prepared for the peak summer driving season.
“People know the Iranian situation will stay in the market for quite some time,” said Alexandre Kervinio, an analyst at SG Commodities in Paris.
On Saturday, the U.N. nuclear watchdog voted to report Tehran to the Security Council over its atomic work amid international concern the Islamic state wants to develop weapons. Tehran says it needs nuclear technology purely for civilian purposes, including power generation.
But the Security Council will take no action against Iran before a conclusive International Atomic Energy Agency report due next month.
Iran’s 2.4 million barrels per day of crude exports cover the import needs of a country the size of Germany and the world would be hard-pressed to fill any supply gap.
“Obviously they (Iran) have a certain position within the energy market but that should not in my view deter us from taking action if that’s where we get to,” Blair told a British parliamentary committee on Tuesday.
The price of oil has doubled in a two-year rally fueled by strong demand in the United States and the fast-growing economies of China and India. Funds managing billions of dollars of pension money have entered the market in force.
“The funds see economic growth is expected to continue and over the last two years, commodities have outperformed every other asset class,” SG Commodities’ Kervinio said.