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The New York Times: Oil Prices Slump on Expected U.S. Fuel Stock Build

Published: January 31, 2006
Filed at 10:57 p.m. ET
SINGAPORE (Reuters) – Oil prices slid on Wednesday, undermined by expectations of a rise in crude and product inventories in the United States, but Iran's defiance over its nuclear program kept losses in check.
U.S. light crude dropped 41 cents to $67.51 a barrel by 10:27 p.m. EST, deepening a loss of 43 cents on Tuesday. London Brent crude eased 31 cents to $65.68 a barrel.
U.S. government data due later on Wednesday was forecast to show crude stocks in the world's top consumer rising by 1.3 million barrels last week, which would add to a stockpile already 11 percent above last year's levels.
“The inventory report should show that inventories of crude and refined products are comfortable for this time of the year,'' said Tobin Gorey, commodity analyst at the Commonwealth Bank of Australia.
Analysts in a Reuters poll expected gasoline stocks to rise by 1.1 million barrels, while distillate inventories — which include heating oil — were expected to increase by half a million barrels in the face of above normal winter temperatures.
Prices also eased after OPEC, a provider of more than a third of global oil supply, agreed in Vienna on Tuesday to keep output near a 25-year high at 28 million barrels per day (bpd).
Expectations of lower energy demand in the second quarter were pushed from the table as OPEC ministers grappled with political supply risks beyond their control that leave consuming nations worrying prices near $70 could hurt their economies.
U.S. President George W. Bush said in a speech late on Tuesday that America was addicted to oil and called for slashing its imports from the Middle East by more than 75 percent by 2025, a goal the government's top energy forecasting agency suggests will be almost impossible to meet.
Oil prices are still up over 10 percent this year as traders worry that a dispute between Iran and the West over its nuclear program could disrupt supplies, coming after militant attacks in Nigeria and frigid weather in Russia reduced their exports.
“Ordinarily comfortable inventories would mean lower prices — probably closer to fifty-five dollars. But the Iran situation, and several smaller actual interruptions to crude supply, are keeping prices higher,'' said Gorey.
Iran, OPEC's second-biggest producer, assured the world that it would not halt its exports.
“We are not mixing oil with politics,'' Iranian Oil Minister Kazem Vaziri told reporters in Vienna on Tuesday. “Iran will not stop exports.''
Tehran said on Tuesday it would halt snap inspections of its atomic plants and end a suspension of uranium enrichment if an agreement by the world's top five powers to report it to the U.N. Security Council is carried out.
Bush said in his speech that the world must not allow Iran to gain nuclear weapons, though Iran says it wants to use nuclear energy to produce electricity. OPEC member Venezuela, a big supplier of oil to the U.S., has said it will support Iran.
In Nigeria, Royal Dutch Shell said it had resumed normal production at its 115,000 bpd EA oilfield, shut after a militant attack on Jan 11, though production at its 106,000 bpd Forcados field remained shut in.
In major non-OPEC producer Russia, output fell by around 180,000 bpd in January, the biggest monthly drop in the past seven years, as extreme cold hit the country's Siberian oil producing heartland, government sources said on Tuesday.

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