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Oil prices slip below $60 on strong supply
3/10/2006
SINGAPORE, Mar 9 (AFP): Oil prices fell below the key 60-dollar level in Asian trade today as abundant US energy supplies and OPEC's unchanged production levels lowered supply concerns over Iran, dealers said.
New York's main contract, light sweet crude for delivery in April, was down seven cents to 59.95 dollars from its close of 60.02 dollars in the United States Wednesday.
"The 60-dollar level was a good support level but not anymore with production levels high and the (US) inventories which keep building," said Tony Nunan, a Tokyo-based energy risk manager with Mitsubishi Corp.
Adding to the pressure on prices was the Organisation of Petroleum Exporting Countries (OPEC) decision yesterday to keep oil output at a near 25-year high of 28 million barrels per day (bpd).
"Although all indicators show that the market is fundamentally well-supplied with crude oil ... prices remain volatile, these being driven by geo-political factors and associated concerns regarding potential future supply disruptions," the OPEC communique said.
Oil prices jumped last month after Nigerian insurgents attacked Anglo- Dutch giant Shell pipelines leading to a cut in 20 per cent of the country's crude production.
Although the market is weaker for now, dealers believe tensions over Iran and Nigeria provide a good support for oil prices.
The UN nuclear watchdog, the International Atomic Energy Agency, yesterday opened the way for UN Security Council action against Iran over its nuclear programme, prompting Tehran to threaten Washington with "harm and pain" for leading the charge.
Iranian security official Javad Vaidi, who led the Iranian delegation in Vienna, said Iran would not-for now-use its key role as an oil supplier as a weapon in the international dispute but could review the situation later.
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