Oil prices fall on positive Iranian statements

London (Platts)--19Jun2006

World oil prices retreated Monday after positive statements were released
over the weekend from Iran that the regime is prepared to limit its nuclear
program.
Light, sweet crude futures for July delivery on the New York Mercantile
Exchange were trading at $69.45/barrel at 1250 GMT, down 43 cents from
Friday's settle. The contract closed up 38 cents in New York on Friday. August
IPE Brent was trading at $68.34/barrel, down 46 cents from Friday's close on
the Intercontinental Exchange.
Iran is ready to limit its nuclear program but will not suspend uranium
enrichment as a precondition for international talks, the Financial Times
reported Monday, citing regime insiders.
"Around 70% of senior people may be prepared, under pressure, to accept
an eventual limit on the number of centrifuges (for enriching uranium)," one
of the two anonymous sources was quoted as saying.
The source added that Tehran would give the international community
"objective guarantees" of the peaceful nature of its nuclear program.
Iran said earlier Sunday it would not accept any "preconditions" for
fresh international talks over its disputed nuclear research, implicitly
rejecting demands that the Islamic republic suspend uranium enrichment.
Tehran is set to make a counterproposal within the next two weeks in
response to the package of incentives, the Financial Times reported.
Also Monday OPEC shaved its forecast of world oil demand growth in 2006
to 1.36 million b/d from the 1.38 million b/d previously forecast, citing
signs that high prices are denting demand.
One broker said that despite more bearish sentiment in the market he
could not envisage a collapse in the price of Brent as underlying bullish
factors are still present and it could well edge up as the week goes on.
"It has been a quiet market this morning all things considered, with
volume on Brent at 17,000, gasoil 8,000 and ICE WTI 3,000," he said. "There
was a rally late on Friday following the release of the release of the latest
Centre for Global Energy Studies report which claimed that the abundance of
crude in the market is temporary as refinery utilization climbs as the pace of
turnarounds continues."
Non-commercial net long positions on WTI crude have reduced by 20,000 on
a futures and options basis from a week ago, according the latest CFTC report
issued by JPMorgan. The reversal saw front-month WTI dip to a three week low
last week and coincided with a two month low for IPE Brent which fell briefly
to $66.44/barrel.
A Petromatrix report issued on Monday holds the view that the oil market
has generally run its bull course and will not be able to sustain prices above
$75/barrel citing the negative impact on global demand resulting from the high
commodity prices.
--Jonathan Davies, jonathan_davies@platts.com

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