WASHINGTON (AFX) – Oil prices held steady Tuesday after Iran’s top nuclear negotiator said Tehran was ready for "serious negotiations" over its disputed program but left open the question of whether it would suspend uranium enrichment.
Light sweet crude for September rose 18 cents to settle at $72.63 a barrel on the New York Mercantile Exchange. October Brent crude on London’s ICE Futures exchange rose 18 cents to $73.56 per barrel.
Iran’s nuclear negotiator, Ali Larijani, said "Iran is prepared as of Aug. 23 to enter serious negotiations" with the countries that proposed a package of incentives aimed at persuading it to suspend uranium enrichment, according to state-run television.
However, with the matter still unresolved, Prudential Financial energy broker Aaron Kildow said there would be "no relief" in oil prices. "The market is still stuck in limbo," Kildow said.
Natural gas futures climbed 38.4 cents, or 5.8 percent, to settle at $7.008 per 1,000 cubic feet.
The climb in natural gas was tied to warm weather and high electric power demand in the Midwest, according to Kildow, and partly attributable to a tropical depression in the eastern Atlantic that traders were monitoring. But Kildow noted that the storm appeared headed to the Atlantic coast, not the Gulf Coast, home to critical energy infrastructure.
Forecasters said the outer bands of a tropical depression brought rain squalls early Tuesday to the southern Cape Verde islands in the far eastern Atlantic. The storm, which formed Monday, had maximum sustained winds near 35 mph, 4 mph below the threshold for a tropical storm and well below hurricane strength of 74 mph, according to the National Hurricane Center.
The U.N. Security Council passed a resolution last month calling for Iran to suspend uranium enrichment by Aug. 31 or face the threat of economic and diplomatic sanctions. Enriched uranium can be used to create the core of nuclear warheads.
Iran’s Supreme Leader Ayatollah Ali Khamenei said Monday that Tehran will pursue nuclear technology. In Austria, diplomats and U.N. officials said Iran has turned away U.N. inspectors wanting to examine its underground nuclear site in an apparent violation of the Nuclear Nonproliferation Treaty. The officials spoke on condition of anonymity.
"Fears remain that if Iran rejects the proposals … and the U.N. imposes sanctions, the world’s fourth-largest producer will shut off exports, forcing producers to dip into holding stocks," said Paul Harris, oil market analyst at Bank of Ireland Global Markets.
Elsewhere in the Middle East, a cease-fire in Israel and Lebanon was in its seventh day, although Israel on Saturday conducted a pre-dawn commando raid deep into Lebanon’s eastern Bekaa Valley, prompting U.N. Secretary-General Kofi Annan to declare the Israelis in violation of the Security Council truce resolution.
Oil prices hit a record high of $78.40 a barrel on July 14, two days after fighting erupted in Lebanon.
They fell back last week as supply fears abated after the cease-fire and as BP PLC restored half of the production at the Prudhoe Bay oil field in Alaska, which was disrupted earlier this month because of pipeline corrosion. On Friday, prices dipped below $70 a barrel in intraday trading for the first time in almost two months.
In other Nymex trading, gasoline futures rose 0.27 cent to settle at $1.9393 per gallon, while heating oil futures rose 0.39 cent to settle at $2.0366 per gallon.