Oil tumbles below $70, eyes weaker Alberto, Iran ($69.77/bbl)

Reuters ^ | June 13, 2006 | Jonathan Leff

[RWR8189]

SINGAPORE (Reuters) - Oil fell almost 1 percent to below $70 a barrel on Tuesday, pausing to watch the season's first Atlantic storm as it weakened along a route that will take it well clear of U.S. energy installations.

Iran's reluctance to give up its atomic program, unrelenting violence in Iraq and strong demand signals from China all lent the market support, keeping prices up 15 percent this year and within sight of their record high of $75.35.

U.S. light sweet crude for July fell 69 cents to $69.67 a barrel by 0746 GMT, extending Monday's $1.27 slump. London Brent crude lost 72 cents to $68.21 a barrel.

Tropical Storm Alberto unexpectedly gained power over the Gulf of Mexico on Monday, threatening to become the season's first hurricane, but it remained on track to come ashore in northwest Florida, well clear of Gulf oil rigs and refineries.

It weakened marginally to 65 miles per hour (105 kph) by 1 a.m. (0500 GMT), the U.S. National Hurricane Center said, but could strengthen again before making landfall on Tuesday morning.

(For a graphic on Tropical Storm Alberto's path see the story on Reuters.com: http://www.reuters.com)

Relief that Alberto would spare the U.S. Gulf Coast, source of a quarter of the country's oil and gas, was short-lived as traders refocused on future risks -- from summer demand to geopolitical tensions to the threat of more severe storms.

"Going into the peak demand season from a tighter (supply) base than last year makes it difficult to see lower prices," said Michael Coleman, director at hedge fund Aisling Analytics. "I don't think we will see them much below $70 for very long."

U.S. gasoline inventories stood about 2.4 percent below year-ago levels a week ago but are expected to have risen by 1.4 million barrels in the week to June 9, a seventh consecutive build, a preliminary Reuters poll shows.

Crude stocks were seen rising by 400,000 barrels and distillate inventories climbing 1.6 million barrels. U.S. government stock data is due out on Wednesday.

IRAN, IRAQ IN FOCUS

Iran's uncertain signals on a Western offer to defuse the stand-off over its nuclear program has whipsawed oil markets, with Tehran first sounding a positive note on the incentives last week but later citing some problems.

Pressure to give a clear reply to the offer mounts this week as the 35-nation board of the International Atomic Energy Agency (IAEA) meets in Vienna. Iran, which began a new round of uranium enrichment only last week, reiterated its right to continue such work, but did not reject the offer outright.

In Iraq, early hope for higher oil exports after the killing of al Qaeda's country leader Abu Musab al-Zarqawi faded further after a series of bombs in the northern oil hub city of Kirkuk killing at least 24 people on Tuesday.

That offset some optimism over the resumption of supplies through Iraq's vital northern export pipeline -- mostly idle since 2003 due to repeated sabotage -- at the weekend.

Iraq resumed pumping through its vital line to Turkey after a four-month halt and will sell the crude once it builds up enough stocks, industry sources said.

U.S. Energy Secretary Sam Bodman said he did not expect the number of attacks on Iraqi oil operations to fall.

[RWR8189]

Light Sweet Crude Oil

6/13/2006 Session Contract Detail for July 6

	Last				69.77
	Open High				70.24
	Open Low				70.24
	High				70.43
	Low				69.67
	Settle				70.36
	Change				-.59
	Open Interest				184196
	Volume				0.00
	Last Updated				06/13/2006 04:13:59

Unleaded Gasoline

6/13/2006 Session Contract Detail for July 6

	Last				2.1060
	Open High				2.1225
	Open Low				2.1225
	High				2.1260
	Low				2.1060
	Settle				2.1243
	Change				-.0183
	Open Interest				42893
	Volume				0.00
	Last Updated				06/13/2006 04:15:46

 

[Paladin2]

My tactical oil reserve last filled in April is now expected to last into August.

[OldFriend]

Does this mean that Harry Reid has to retract his statement that storm ALFREDO proves there is global warming.

[dennisw]

GOLD is wasted - below 588$ overseas
http://www.kitco.com/charts/livegold.html

[Brilliant]

Even $60 or $50 is still high, though.

[Peter W. Kessler]

Yeah, I wouldn't call a 23 cent drop "tumbling."

[Wurlitzer]

The speculators in oil must have all the mental strength of a muslim. Every little breeze in the world economy is cause to buy/sell and the average consumer get the big blow. I swear I could break wind and change the price of oil futures.

[excalibur1701]

So why did our gas stations bump their prices up 20 cents a gallon on Monday??

[38special]

Last time oil prices dropped, local gas prices jumped ten cents per gallon 'round here.

[dakine]

Since you own the gas stations, please tell us...

[excalibur1701]

Did your mommy let you play on the computer again?