- The Washington Times - Friday, May 19, 2006

LONDON (AP) — Oil prices fell today after Iran’s minister to OPEC said the group was not likely to cut production at its June meeting despite signs of surplus supply in the market.

Hossein Kazempour Ardebili said today that the Organization of Petroleum Exporting Countries wants to reassure the market as geopolitical concerns have driven prices up.

“The fundamentals call for a cut,” he said, but said the group would not cut output.

Traders have been concerned about how the West’s standoff with Iran will affect that nation’s oil exports as well as supply disruptions in Nigeria and the Gulf of Mexico during hurricane season.

Light, sweet crude for June delivery on the New York Mercantile Exchange dropped 70 cents to $68.75 a barrel in electronic trading by afternoon in Europe. July Brent crude on London’s ICE Futures exchange fell 72 cents to $68.95 a barrel.

OPEC acting Secretary-General Mohammed Barkindo said today that geopolitical tensions were causing a premium of up to $15-a-barrel on crude prices and urged governments of both producing and consuming countries to ease the tensions.

“Remove the impediment of geopolitical concerns, tensions, and the resulting speculation and the oil price will find its rightful place in the market,” he said at a meeting in Norway between OPEC and the International Energy Agency.

Gasoline futures fell 1.5 cents to $1.9985 a gallon, while heating oil futures dropped more than a cent to $1.9387 a gallon.

U.S. government data released Wednesday showed the domestic supply of gasoline rose for the third straight week amid stagnating demand. The Department of Energy said domestic gasoline supplies grew by 1.3 million barrels last week to 206.4 million barrels.

While that is 3.5 percent below year-ago levels, it comes at a time when gasoline consumption appears to be flattening out as a result of high prices.

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