Oil falls on eurozone worries, easing Iran jitters

March 07, 2012 | 08:55

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A slight ease in tensions over Iran and dimmer growth prospects in China and Europe pressed oil prices lower Tuesday.

Worries over the fate of Greece's massive bailout deal also had an impact, sending the euro tumbling and oil with it.

New York's main contract, West Texas Intermediate (WTI) crude for delivery in April, shed $2.02 to settle at $104.70 a barrel.

Brent North Sea crude for April lost $1.82 to $121.98 a barrel in London trade.

Toned-down rhetoric over Iran from US President Barack Obama and Israeli Prime Minister Benjamin Netanyahu in their meeting in Washington Monday gave some encouragement to a market increasingly worried about an imminent attack by Israel aimed at destroying Iran's nuclear facilities.

That was backed up by a new offer from global powers to Tehran to resume stalled nuclear negotiations, said Bart Melek of TD Securities.

"Should they come to an agreement, that would reduce the risk premium to oil prices... because the risk there is a war in the Mideast moderates."

Toned-down views of Chinese and European growth prospects this year also helped depress prices, Melek added.

Even so, a US government forecast nevertheless predicted firm prices this year, citing the disruptions to supplies in the Middle East and Africa and solid demand.

The US Energy Information Administration raised its forecast for the average WTI price this year to $106 a barrel, $5 higher than the forecast a month ago.

"Constraints in transporting crude oil from the US midcontinent region contribute to the expected continuing discount for WTI relative to other world crude oil prices," it said.

AFP

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