Oil prices back off from record in previous session

Source: Agencies  |   2008-7-5  |     ONLINE EDITION

OIL prices fell more than US$1 a barrel yesterday from record levels set a day earlier on hopes that tensions surrounding Iran's nuclear program could ease and cut the chances of American or Israeli military action against OPEC's second-largest oil producer.

Iran yesterday gave an undisclosed response to an international offer of economic and other incentives if it suspends a central part of its nuclear program.

Iran's ambassador to Belgium presented the response to European Union foreign policy chief Javier Solana in Brussels, Iranian state TV reported.

By evening in Europe, light, sweet crude for August delivery fell US$1.19 to US$144.10 a barrel in electronic trading on the New York Mercantile Exchange.

There was no floor trading Friday in New York because of the July Fourth holiday.

Crude futures reached a record high of US$145.85 in New York on Thursday before settling at a record close of US$145.29 a barrel. Trading volumes were lower than usual.

In London, Brent crude futures fell US$1.15 to US$144.93 a barrel on the ICE Futures exchange.

Oil prices have risen more than 50 percent so far this year.

Suggestions by Saudi Arabia's oil minister that his country doesn't plan to boost production helped bolster prices earlier in the session.

Saudi Arabian Oil Minister Ali Naimi said Thursday in Madrid that the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so.

Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, "all our buyers are satisfied and happy," he said.

Gains by the dollar Thursday against the euro helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signaled it didn't expect additional rate hikes that might further boost the euro.