Crude oil prices declined on Tuesday as traders' fears eased over possible disruptions to Iranian oil supply linked to its nuclear ambitions.
Light, sweet crude for March delivery fell 30 cents to $64.81 a barrel on the New York Mercantile Exchange in Asian electronic trading midmorning in Singapore. The contract slipped 26 cents to settle at $65.11 a barrel on Monday.
Analysts said prices fell because the market had already factored in the risk to supply posed by Iran's nuclear standoff with the international community, and because of a milder-than-usual winter in the United States.
"Between now and when the UN Security Council actually takes up the issue there will be some saber-rattling, but in the near term traders know there won't be any disruption to supply from it," said energy analyst Victor Shum of Purvin & Gertz in Singapore.
The International Atomic Energy Agency said on Monday that Iran told the agency to remove surveillance cameras and agency seals from sites and nuclear equipment by the end of next week in response to its referral of Iran's disputed nuclear program to the UN Security Council.
Iran insists it only wants to generate electricity, but the United States and some of its allies contend Tehran is trying to build a weapon.
{{/usCountry}}Iran insists it only wants to generate electricity, but the United States and some of its allies contend Tehran is trying to build a weapon.
{{/usCountry}}The agency's head Mohamed ElBaradei said Iran, the second-largest oil producer in the Organisation of Petroleum Exporting Countries, also announced a sharp reduction in the number and kind of IAEA inspections, effective immediately.
Shum said the Iranian nuclear dispute would likely keep crude futures above the $64-a-barrel mark, but other factors such as above-normal temperatures in the US would weigh on prices as heating oil supply is ample and demand isn't high.
"The winter season especially in the US has been mild, so we have a well supplied market. OPEC has said it won't cut production targets in the second quarter. The fundamentals are quite bearish," he said.
Temperatures between Washington, DC, and Boston hit about 40 degrees F (3 degrees C) on Monday, and the heavy snow was limited to the Great Lakes area, according to Accuweather.com. But forecasters also said there was a possibility a snowstorm would hit the US Northeast this weekend.
Nymex heating oil lost 0.68 cent to $1.756 a gallon (3.8 litres) while gasoline declined 1.02 cent to $1.634 a gallon. Natural gas fell 17.5 cents to $7.82 per 1,000 cubic feet.