Oil prices sagged on Wednesday as traders held the view Israel's offensive with Lebanon would not engulf the region, and ahead of fresh US crude inventories data, dealers said.
LONDON: Oil prices sagged on Wednesday as traders held the view Israel's offensive with Lebanon would not engulf the region, and ahead of fresh US crude inventories data, dealers said.
New York's main contract, light sweet crude for delivery in August, fell 41 cents to $73.13 dollars per barrel in electronic deals before the official opening of the US market. It earlier touched $72.81 dollars -- the lowest point since the end of June.
In London, Brent North Sea crude for September delivery dropped 30 cents to $74.06 per barrel in electronic trading, after earlier touching as low as $73.80.
Since striking recent records, crude oil prices have slumped in London and New York, by 5.6 percent and 7.0 percent respectively, on hopes that the Middle East crisis would calm down over the next week or so.
"Prices are weakening as a consensus starts to be formed that Israel's conflict with Hezbollah will be contained within southern Lebanon and is unlikely to last for more than another week before the US starts to exert pressure for a ceasefire," said Barclays Capital analyst Kevin Norrish.
"Although the market is showing a greater level of comfort with current geopolitical risks, fundamentals are also tightening and we think it unlikely prices will move much below the low 70s level."
Prices spiked after Israel launched a wide military offensive across Lebanon last Wednesday, touched off by attacks on the Jewish state by the Hezbollah militant Islamic group and the abduction of Israeli soldiers.
New York crude had hit a record $78.40 last Friday, while London Brent struck a historic $78.18 early on Monday.
Major oil producer Iran remained the key market-moving issue, according to Tobin Gorey, commodity strategist at the Commonwealth Bank of Australia.
"By the time the Israeli-Hezbollah conflict escalated last week, prices were already over $75," he said.
"The bigger issue is... the Iranian nuclear situation. Unless we know for certain that there will be no disruption of supplies from (Iran), the market will still be on edge."
The five permanent members of the UN Security Council plus Germany held informal talks on the Iranian nuclear crisis Tuesday but reached no decision on a text demanding that Tehran to halt sensitive fuel enrichment work.
The Iran nuclear issue risks getting caught up in the immediate Middle East crisis since the Western powers hold Tehran responsible for backing Hezbollah.
Meanwhile, analysts were looking ahead to the traditional weekly snapshot of US crude energy stockpiles, which is published later Wednesday by the US Department of Energy.
In particular, gasoline or petrol reserves are under heightened scrutiny because of peak US demand amid the crucial holiday driving season, when many Americans hit the roads for their vacations.
The market was also eyeing hurricane threats in the US Gulf Coast. Last year hurricanes severely damaged energy installations on the rig-heavy region, pushing oil prices to then-record peaks.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}