June 08, 2006	Thursday	Jumadi-ul-Awwal 11, 1427

LONDON, June 7: World oil prices sank by more than a dollar on Wednesday after news that US energy stocks rose across the board last week, coupled with positive developments in the Iranian nuclear crisis, dealers said.

New York’s main contract, light sweet crude for delivery in July, dropped $1.50 to $71 per barrel in pit trading.

In London, Brent North Sea crude for July delivery shed $1.35 to $69.46 per barrel in electronic deals.

According to the US Department of Energy (DoE), crude reserves rose by 1.1 million barrels to 346.6 million during the week to June 6, whereas analysts had been expecting a fall.

Gasoline or petrol reserves rose one million barrels to 210.3 million during the week, undershooting analysts’ forecasts of a 1.5-million-barrel increase.

Motor fuel supplies were 2.4 per cent lower than at the same stage last year.

“It is bearish overall,” said Societe Generale analyst Deborah White.

“What is particularly bearish is the crude figure. We had been expecting a crude stocks draw and instead we got a build.”

The US driving season, which began at the end of May, sees many Americans take to their cars on vacation, strongly increasing demand for gasoline.

US refineries, meanwhile, operated at 91 per cent capacity last week, down slightly from 91.4 per cent the prior week.

Elsewhere, market participants hoped for a peaceful resolution to the ongoing Iranian nuclear dispute.

Iran, a leading producer and exporter of oil, has indicated that it would at least consider a package of incentives offered by world powers for to halt its controversial nuclear programme.

“Coming out of Iran there seems to be some positive developments,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

“The Iranians indicated they would seriously consider the proposal from the West ... so it has had a calming effect on the market.”

In Nigeria – Africa’s biggest crude producer — five South Koreans and one Nigerian were abducted by unidentified gunmen from an oil field operated by energy major Royal Dutch Shell early on Wednesday.

“News has come in of fresh violence in Nigeria that should mean oil prices do not fall too far,” cautioned Sucden analyst Sam Tilley.—AFP