- The Washington Times - Thursday, June 8, 2006


Oil prices fell for the third straight day yesterday after the death of al Qaeda’s leader in Iraq and on concerns of a slowdown in global economic growth.

Oil analysts were cautious about reading too much into the U.S. air strike that killed Abu Musab Zarqawi, who led a campaign of violence across Iraq.

Zarqawi was not directly linked to attacks on Iraqi oil infrastructure, said Antoine Halff, of Fimat USA. “As such, I don’t think his death will result in a significant decline in attacks on pipelines,” he said. “Attacks on pipelines are by former Ba’ath Party insiders.”

Signs of easing diplomatic tensions between Iran and the West, and word from Nigerian militants that they would release foreign hostages, contributed to yesterday’s decline in oil prices, which came after a 2 percent dip on Wednesday after U.S. data showed rising crude and gasoline supplies.

Yet the cost of crude is still about 30 percent more than a year ago, and that is a big reason why nationwide pump prices are hovering slightly below $3 a gallon, on average, and are not likely to plummet anytime soon.

Analysts said gasoline traders are especially worried about this summer’s Atlantic Ocean hurricane season and the potential for powerful storms to damage important oil production and refining facilities across the Gulf Coast.

Light, sweet crude for July delivery fell 47 cents to settle at $70.35 a barrel on the New York Mercantile Exchange. The last time Nymex oil futures settled below $70 was on May 24.

“The hope is that with the removal of the terror leader in Iraq, the Iraqi situation will stabilize faster and future oil supply could increase,” said Victor Shum, a Singapore-based analyst with Purvin & Gertz.

But Societe Generale’s Mike Guido said killing Zarqawi “seems to be more of symbolic accomplishment” and that “growing concerns of a macro slowdown” in global economic growth — fueled yesterday by the European Central Bank’s decision to raise its key interest rate — also played an important role in sending oil prices lower.

Another recent balm for the market was word from Iran that it would study a package of incentives by world powers hoping to curb its nuclear program.

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