Oil prices down despite higher demand in China

Crude oil prices were down on Tuesday as pressure grew for a ceasefire in the conflict between Lebanon and Israel.  Prices went up early when the US government said that it would be impossible to enforce an immediate cease-fire, but comments from Saudi Arabia that the conflict could spread throughout the region was seen as putting pressure on the Bush administration to encourage Israel to bring the fighting to an end.

September delivery Brent crude dropped $1.06  to $73.55 per barrel in London, while West Texas Intermediate crude September contracts on the New York Petroleum Exchange fell $1.05 to $74.00 per barrel.  The declines were in spite of reports that China’s oil imports are up by 15.6 percent year-on-year, while imports of oil products are up by 26 percent.

Gasoline prices were down as well, by almost 3 cents to $2.2850 per gallon for Nymex unleaded August contracts.  The decline came despite fears of refinery disruptions; the Amuay refinery in Venezuela, which can process as much as 630,000 barrels of crude oil per day, was damaged by fire, and could be offline for some time to come.