UPDATED: 09:18, Aug. 17, 2006
Oil prices continued to fall Wednesday as a cease-fire took hold in Lebanon and concerns eased about supply disruptions in the U.S. state of Alaska.
Light sweet crude for September delivery fell 7 cents to $72.98 a barrel in midafternoon Asian electronic trading on the New York Mercantile Exchange.
October Brent at London's ICE Futures exchange, which moves to the front month from Thursday, lost 18 cents to $73.59 a barrel. The September contract was down 4 cents at $73.76 a barrel.
Prices have fallen all week since a cease-fire took effect Monday, ending more than a month of fighting between Hezbollah and Israel. Despite a few early skirmishes, both sides avoided any escalation and Israeli forces began pulling out of southern Lebanon on Tuesday.
Investors also responded to news that BP expects to maintain half of its production at a large oil field in Alaska, despite a pipeline leak. BP had previously said it would have to completely shut down the oil field, the largest in the U.S., after discovering a leak nearly a week ago.
As of Monday, 150,000 barrels of crude and natural gas a day were flowing from the western side of the field. BP spokesman Daren Beaudo said there is no timetable in place, but the company intends to ramp up production to about 200,000 barrels, or half of normal production.
In other Nymex trading Wednesday, heating oil futures rose less than a penny to $2.0270 a gallon, and gasoline futures rose 0.84 cent to $2.0000 a gallon. Natural gas futures rose 7.9 cents to $6.940 per 1,000 cubic feet.
Before the cease-fire, the market had worried that the conflict in the Middle East might threaten world oil supplies if it spilled into other countries in the region, particularly Iran, OPEC's No. 2 oil producer and a backer of Hezbollah. Those fears raised crude prices to a record $78.40 a barrel on July 14, two days after the fighting started.
Data released Tuesday by the Organization of Petroleum Exporting Countries confirmed the downward trend in prices. OPEC's reference basket of 11 crude oils was quoted at $69.54 a barrel Monday, down 80 cents from Friday.
Prices remain supported by the standoff between the United Nations and Iran over its nuclear program as well as supply disruptions in Nigeria due to civil unrest there.
Oil traders are also watching weather patterns for potential hurricanes that could strike Gulf of Mexico coast refineries, as well as signals for where fuel demand is headed.
Source: The Associated Press