Oil prices retreated yesterday after a short rally, as traders reacted to a changing political landscape in Italy and tensions in the Middle East.
New York's main contract, light sweet crude for delivery in December, fell 36 cents to $98.63 a barrel after reaching a near four-month high of $99.69 earlier in the day. Brent North Sea crude for December dipped nine cents to $114.07 a barrel. Algerian Energy Minister Youcef Yousfi yesterday said that current oil prices were fair for both consumers and producers and were having "no major (negative) impact on the global economy."
Crude futures have risen in recent days on international tensions over Iran's nuclear ambitions, helping to offset fears that the eurozone debt crisis could slash demand for energy, according to analysts. Iran is the second-biggest producer in the Organisation of Petroleum Exporting Countries (OPEC) after Saudi Arabia, and any escalation in the standoff over its nuclear programme is seen as potentially disruptive to oil supplies. "We think that the markets are just getting a little concerned over the supply side shock that could come if the matter escalated in some form or extent," said David Lennox, an analyst at Fat Prophets research house.
The International Atomic Energy Agency said in its report last week there was "credible" intelligence suggesting Iran had carried out work towards building nuclear warheads, a claim denied by officials in Tehran. In Europe meanwhile, the focus was on Rome, one day after economist Mario Monti was picked to replace Silvio Berlusconi as Italy's prime minister. Monti has pledged to get to work on tackling a crippling debt crisis in Italy, which is the eurozone's third-biggest economy.