BUSINESS

Oil rebounds from below US$90 as Iran rejects West's nuclear program controls

05/24/2012 08:44 EDT | Updated 07/24/2012 05:12 EDT
NEW YORK, N.Y. - Oil bounced back Thursday, a day after falling below US$90 per barrel for the first time in months.

Benchmark West Texas Intermediate crude rose 76 cents to $90.66 a barrel in New York. Brent crude, which is used to price international oil varieties, gained 99 cents to US$106.55 a barrel in London.

Oil has fallen about $15 a barrel since May 1 and on Wednesday dropped below $90 for the first time since Oct. 21. That attracted some bargain hunters, analysts said, despite lingering uncertainty over future demand as China's economy slows and Europe's economy remains unsettled.

European leaders concluded a summit early Thursday with little agreement on how to fix the region's financial problems. Seven countries that use the euro are in recession, including Italy and Spain. Greece holds an election next month that could determine if that country drops out of the eurozone, a development many analysts feel will further destabilize Europe's economy.

Traders also kept watch on talks in Baghdad over Iran's nuclear program. Representatives of six countries, including the U.S., met with Iranian negotiators on Wednesday and Thursday. The talks ended Thursday with a plan to meet next month for another round of talks but agreement on little else.

Tensions between Iran and the West pushed up the price of oil near $110 per barrel earlier this year. Iran is the world's third-largest oil exporter, so there were concerns about supply disruptions from the Middle East.

Efforts by the United States, Europe and other countries to inhibit Iran's oil trade forced Iran to the negotiating table. Saudi Arabia, Libya and Iraq have delivered more oil to world markets to cover the potential loss of Iranian oil. That eased concerns about a shortage of supply and contributed to the drop in oil.

In other trading, natural gas prices fell after the U.S. government said inventories continued to build last week. The supplies are about 38 per cent above the five-year average while demand remains weak.

Natural gas dropped nine cents, or three per cent, to US$2.65 per 1,000 cubic feet. Natural gas is still up 75 cents from a 10-year low reached in April, although it's still down $1.70 from a year earlier.

Heating oil rose one cent to US$2.82 a U.S. gallon (3.79 litres) and gasoline futures rose less than a penny to US$2.88 a gallon.

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