Oil falls below $64 after Iran frees Britons
4/8/2007 10:59:26 PM
By Fayen Wong
SYDNEY (Reuters) - Oil prices retreated below $64 a barrel on Monday, extending a decline after Iran released 15 British sailors and marines, easing concerns over supplies from the world's fourth-largest oil exporter.
U.S. crude (CLc1) fell 43 cents to $63.85 a barrel by 0326 GMT, adding to Thursday's 10-cent drop after markets were closed on Friday for the Easter holiday. London Brent crude (LCOc1) was down 35 cents at $67.89.
Analysts said the fall in oil prices late last week, triggered by Iran's unexpected decision to free the Britons, had caught investors by surprise.
Speculators on the New York Mercantile Exchange built net long positions on crude oil last week to the highest level in more than six months in a bet prices would rise, the Commodity Futures Trading Commission said Friday. But Iran's move forced them to cut their positions on Monday, pushing oil prices lower.
"Oil prices have been strongly inflated by the diplomatic tensions in the past two weeks. So when prices fell, those who betted heavily for oil to rise would have to quickly cut their losses," said Tetsu Emori, an analyst at Mitsui Bussan Futures in Tokyo.
The March 23 detention of the British military personnel pushed U.S. oil above $68 in late March -- the highest level in more than six months. While Iran's row with Britain has ended, tensions with the West over its nuclear program continue.
President Mahmoud Ahmadinejad is expected to hold a news conference later on Monday to reveal the country's nuclear plans when he visits its uranium enrichment facility.
Iran's foreign ministry said on Sunday the country would not discuss its "obvious right" to master nuclear technology and that the country's military "was totally prepared to defend the country."
The United States has accused Iran of trying to build a nuclear bomb but Tehran has insisted that it is peaceful atomic work.
U.S. ECONOMY, NIGERIA
Traders are also watching supplies from the world's eight-largest oil exporter Nigeria, which have been cut by militant attacks. Oil major Royal Dutch Shell Plc (RDSa.L) said on Friday oil production of about 477,000 barrels per day may resume in the Niger Delta in several months' time.
Analysts said the market would keep a cautious watch on the economy of the United States, the world's top oil consumer, which has already seen a housing market slowdown.
"There is some mixed U.S. economic data... but there are no catalysts at the moment for the market to believe that the U.S. is heading towards a recession," Emori said.
U.S. employers added a stronger-than-expected 180,000 new jobs in March and the unemployment rate fell to a five-month low.
A report from the Organisation for Economic Cooperation and Development pointed to a slowdown in the world's largest economy, and signaled a weaker outlook for G7 economies as a whole
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