Oil prices down on progress on Iran

Crude oil prices were lower on Tuesday after Iran reacted in a largely positive manner to an incentives package presented by several western nations in an effort to resolve the conflict over Iran’s controversial nuclear program.  While there are still some “ambiguities” in the package from the point of view of the secretary of Iran’s Supreme National Security council, he also said that it contained “positive steps”.

Meanwhile, the Energy Information Administration said that it expects the price for West Texas Intermediate crude to average $68 per barrel for the rest of this year and all of next year.  The statistical arm of the US energy department also projected that consumption growth was slower due to high prices but that it would be at 1.7 million barrels per day through the rest of 2006 and at 1.9 million barrels per day in 2007.  This increase in consumption, the EIA said, would be met by production increases from non-OPEC nations.

By late afternoon in London, July contract Brent crude on the International Petroleum Exchange had dropped $1.40 to $69.97 per barrel, while in early afternoon trade on the New York Mercantile Exchange, West Texas Intermediate crude for July delivery was $1.15 lower at $71.45 per barrel.