Oil Retreats

Elena
07 Jun, 2006
New York City

Oil prices pulled back Wednesday, reflecting Iran

[R]8:00AM Oil prices declined on positive developments over Iran''s nuclear program.[/R]
Crude oil prices retreated Wednesday, reflecting Iran’s positive reaction to the recent diplomatic developments with the West in connection to Teheran’s nuclear program. After receiving the latest proposal from EU foreign policy chief Javier Solana, Iranian nuclear negotiator Ali Larijani called the talks with Solana ‘constructive’ and said Iran would respond after studying the incentives. However, according to analysts, uncertainty over the outlook will keep a floor under oil prices. Light sweet crude for July delivery fell 35 cents to $72.15 a barrel in electronic trading on the Nymex by midday in Europe. July Brent crude futures on London''s ICE Futures exchange fell 26 cents to $70.55 a barrel. Gasoline futures fell less than half a cent to $2.1760 a gallon, while heating oil prices were down more than a cent to $2.0312 a gallon. Natural gas prices fell 12 cents to $6.265 per 1,000 cubic feet. Oil prices have largely hovered above $70 a barrel on mixed signs on U.S. gasoline consumption, the approaching hurricane season and geopolitical uncertainties, including the war in Iraq and violence in Nigeria, the United States'' fifth-largest supplier. Nigerian militants kidnapped five South Koreans in a bloody overnight raid on a Daewoo Engineering and Construction Co. compound in southern Nigeria. The militants said the workers were contracting for oil company Royal Dutch Shell PLC at the time.


[R]7:30AM Asian stocks finish lower on U.S. interest rate concerns.[/R]
Asian markets finished lower. The Nikkei fell 1.88% to 15,096.01. Banks and heavy-industry shares were among the biggest decliners in the Tokyo session. Resona Holdings dropped 4.48%. Kawasaki Heavy Industries fell 4.29%. Machinery maker Komatsu plunged 6.5% after KBC Securities lowered its rating to sell from buy on worries that the stock was overvalued. Exporters also dived on concerns that U.S. inflation could hurt overseas demand for Japanese products. Toshiba Corp shed 3.49% and Sanyo Electric Co fell 2.3%. In Hong Kong, the Hang Seng benchmark finished down 0.98%, to 15,816.55. Property shares widened their losses as U.S. interest rate expectations impacted the dollar-pegged economy. Sinopec Shanghai Petrochemical lost 8.97% after parent company Sinopec rejected reports it intended to buy out its subsidiary''s Shanghai-listed shares. The Bank of China, having advanced every day since its debut on the exchange on Thursday, was also down 1.4%. It said that an over-allotment option in its IPO had been exercised, making possible the sale of 3.84 billion additional shares at the initial price of HK$2.95. The move raised an additional $1.42 billion, putting the total value of the IPO to more than $11 billion.


[R]6:30AM European stocks continued the decline in mid morning trade.[/R]
European markets were lower in mid morning trade. London FTSE 100 lost 20 points, or 0.4% to 5,649.4. The Xetra Dax fell 9.1 points, or 0.2%, at 5,502.81 and the French CAC 40 dropped 14.4 points, or 0.3%, at 4,783.48. On the corporate front, Novartis gained 0.1%, after the Swiss pharmaceutical company launched a $569m bid for the UK biopharmaceutical, NeuTec Pharma. The move plans to strengthen its infectious details portfolio. Neutec traded 14.6% higher. Societe Generale lost 0.2%, after the French bank announced it was buying a 10% stake in Rosbank of Russia. The deal means that Rosbank will delay its planned flotation indefinitely.

France Telecom said that it intends to sell its majority stake in its directories business Page Jaunes as a non-core business. The sale of France Telecom’s 54% stake was expected to raise more than £3bn. Page Jaunes was the strongest gainer from the FTSE Eurotop 300, up 2.8 % higher, while France Telecom fell 0.2%.

Crude oil traded 26 cents lower at $72.24 a barrel by 0232 GMT, after shedding 10 cents on Tuesday. London Brent declined 23 cents to trade at $70.58. The dollar gained against the euro. In morning European trading, the euro purchased $1.2790, down from $1.2834 in New York on Tuesday. The British pound slid to $1.8573 from $1.8608 in New York, while the dollar advanced to buy 113.40 Japanese yen from 113.14 the day before.