WASHINGTON (AP):
CRUDE OIL prices fell more than two per cent Monday as world powers stepped up efforts to broker a truce between Israel and militants in Lebanon.
But perhaps the bigger surprise in the energy complex was the sharp decline for natural gas futures, which plunged by almost nine per cent despite a heatwave that drove up demand for gas-fired power plants.
"It goes to show you there's no sure things in these markets," said Man Financial broker Andrew Lebow, who attributed the selloff in natural gas to traders' focusing on longer-term forecasts calling for cooler weather.
Even if an immediate Middle East cease-fire is not reached, analysts said the fact that the Israel-Lebanon violence has not spread in the region should help contain, if not sharply reduce, oil prices. The market's biggest fear is that Iran, a financial backer of Hezbollah and OPEC's No. 2 supplier, could be drawn into the conflict.
"At some point the market is going to become immune to every little attack," said BNP Paribas Commodity Futures broker Tom Bentz.
GOING EVEN LOWER
Also pushing prices lower were somewhat conciliatory remarks by Iran over the weekend relating to its nuclear stand-off with the West. Iran said Sunday that Western incentives to halt its nuclear programme were an "acceptable basis" for talks, and it is ready for detailed negotiations.
Light sweet crude for August delivery slid US$1.73 to settle at US$75.30 a barrel on the New York Mercantile Exchange.
The front-month futures contract reached an intraday record of US$78.40 a barrel this past Friday before settling at an all-time closing high of US$77.03.
September Brent crude futures on London's ICE Futures exchange fell US$1.66 to settle at US$75.92 a barrel, after hitting a new high at US$78.18 earlier Monday.
