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THE NEW YORK TIMES: Oil Steady Below $67 as Iran Worries Persist

By REUTERS
Published: April 3, 2006
Filed at 0:59 a.m. ET
SINGAPORE (Reuters) – Oil prices held steady below $67 on Monday, supported by lingering doubts over Iran's latest pledge not to cut off oil supplies in its row with the West.
U.S. crude oil futures rose 3 cents to $66.66 a barrel in early electronic trade after sliding 52 cents on Friday, retreating from a two-month high.
On Friday Iranian Foreign Minister Manouchehr Mottaki was the latest official from Tehran to vow that the world's fourth-largest oil exporter would not use oil as a weapon as it faces a UN Security Council rebuke over its nuclear research.
The council last week gave Iran 30 days to halt enrichment, but Tehran rejected the call and analysts remain concerned that it could resort to using oil for leverage.
“The fall in prices is modest… No one is willing to assume Iran will never use oil as a bargaining chip,'' said Tobin Gorey, commodity analyst at Commonwealth Bank of Australia.
Despite Friday's dip, prices rose 3.7 percent last week amid a pre-second quarter influx of fund money into the commodities complex, a big draw-down in weekly U.S. gasoline inventories and an ongoing production outage in Nigeria.
About 550,000 barrels per day (bpd) of output has been shut for six weeks in Nigeria, where militants have staged a series of attacks on platforms and pipelines.
Oil industry and military officials said at the weekend that additional naval patrol boats had not made the Niger Delta safe enough to persuade Royal Dutch Shell, the company most affected, to return to fields it abandoned in February.
OPEC, which agreed a month ago to carry on pumping near a 25-year high to offset supply concerns, appeared to have little choice but to carry on that policy as prices drove back toward last August's record high of $70.85 a barrel.
“The price as it is now, nothing will happen'' at OPEC's next scheduled meeting in June, Qatari Oil Minister Abdullah al-Attiyah said on Sunday. “We are doing all that we can do… to stabilize the oil market.''
Attiyah said he believed the global economy could absorb $60 a barrel crude, the latest indication that the Organization of the Petroleum Exporting Countries was unlikely to allow prices to fall back sharply.
Crude oil prices rallied 8.7 percent in the first quarter, but returns for passive index investors such as pension funds were weaker due to the market's persistent contango, which means front-month prices are cheaper than later months.

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