Asia-Pacific

Oil prices fall as N. Korea worries ease

(AP)
Updated: 2006-07-11 15:56

Oil prices fell for a fourth day Tuesday as concerns about North Korea's missile tests and Iran's nuclear program eased.

Crude oil futures spiked last week after North Korea fired several missiles, hitting an intraday record of $75.78 a barrel on Friday before falling back. Many traders said that surge was unwarranted.

"The market was hyped up because of North Korea's missile tests, but of course that has nothing to do with oil supply and demand, so the market has now been correcting," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Light, sweet crude for August delivery fell 20 cents to $73.41 a barrel in electronic trading on the New York Mercantile Exchange.

In other Nymex trading, heating oil futures declined slightly to $1.9625 a gallon, while natural gas futures gained 8.2 cents to settle at $5.69 per 1,000 cubic feet after falling Friday to their lowest level in nearly two years as U.S. supplies in storage grew to roughly 30 percent above their five-year average.

The recent run-up in oil prices was also fueled by concerns about a diplomatic standoff between the West and Iran, but Shum said those fears were cooling ahead of an upcoming G8 conference and a Tuesday meeting between Iranian and EU negotiators.

On Friday, Iran's top nuclear negotiator, Ali Larijani, told a news conference in Madrid, Spain, that the "nuclear issue is not so complicated that it cannot be solved through dialogue."

EU foreign policy chief Javier Solana and Larijani met in Brussels, Belgium, last week.

The market is also hoping for clues about market supplies from Wednesday's U.S. Energy Department inventory report. Shum said crude and gasoline inventories are expected to fall moderately.

U.S. government data last week showed gasoline demand rising despite average pump prices just under $3 a gallon. The Energy Department said last week that gasoline demand over the past four weeks was around 9.5 million barrels a day, or 1.4 percent higher than a year earlier.