Oil steady on easing Middle East concerns

SINGAPORE, Aug 16 (AFP) – Crude prices were steady in Asian hours Wednesday as traders breathed easier over the Middle East after the UN ceasefire in Lebanon took effect, dealers said. British energy giant BP’s announcement Friday that it would keep pumping oil from its Prudhoe Bay field in Alaska was also a relief for the market after the sharp run-up in prices in recent weeks, they said.

At 2:15 pm (0615 GMT) New York’s main contract, light sweet crude for September delivery was steady 73.05 dollars a barrel after dropping 18 cents in the United States Tuesday.

Brent North Sea crude for delivery in September eased 15 cents to 73.65 dollars.

“The market is starting to wash out some of the fear premium from the Middle East,” said Mark Pervan, a commodities analyst with Daiwa Securities in Melbourne.

He said BP’s announcement that it would maintain about half the output at Prudhoe Bay, the largest oil field in the United States, meant there was “a lot more supply than expected coming from there.”

The field normally produces 400,000 barrels per day of crude — around 8.0 percent of total US output.

There were initial concerns of a major supply disruption from Prudhoe Bay, where a corroded pipeline sprang a leak almost two weeks ago, but BP’s announcement was a relief to the market.

The partial Prudhoe Bay shutdown was expected to impact upon the weekly snapshot of American fuel stockpiles, which the US Department of Energy is due to release Wednesday.

Dealers said further sharp falls in crude prices could be limited by concerns over Iran, where the oil-rich Islamic republic has until August 31 to halt its uranium enrichment and reprocessing activities or face sanctions.

Iran is the world’s fourth-largest crude oil producer and traders fear Iranian energy supplies will be affected if Tehran refuses to back down from international pressure to halt its nuclear programme.

“It is not sustainable because there is still Iran and its nuclear programme. That will probably get renewed focus,” said Pervan.

Iranian President Mahmoud Ahmadinejad on Tuesday rejected a UN Security Council resolution demanding Tehran halt sensitive nuclear work, saying his nation refused to be cowed by the “language of force” in its nuclear standoff.

Meanwhile, the unrest in Nigeria, the world’s sixth biggest crude exporter with a daily output of 2.6 million barrels is also a concern for traders.

Nigerian President Olusegun Obasanjo has threatened to deal “firmly” with kidnappers of foreign oil workers in the southern Niger Delta, and ordered troops and policemen to meet “force with force” in tackling criminals. “Wherever we find hostage-takers now, we will hunt them down. We will not accept this any longer,” Obasanjo said.