August 30, 2006	Wednesday	Sha'aban 5, 1427

LONDON, Aug 29: World oil prices tumbled below $70 on Tuesday on forecasts that tropical storm Ernesto, which had threatened US Gulf Coast oil facilities, would remain below hurricane force, traders said.

New York’s main contract, light sweet crude for delivery in October, fell 66 cents to $69.95 per barrel in pit trading after earlier falling as low as $69.30 -- the weakest level since June 21.

In London, Brent North Sea crude for October delivery dived 89 cents to $69.93 per barrel in electronic trading. It sank earlier to a low of $69.48 which was last seen on June 26.

Crude futures had closed down almost $2 on Monday after Hurricane Ernesto was downgraded to a tropical storm, reducing concern about possible damage to US oil installations in the Gulf of Mexico.

“The main factor in this marked (price) weakness in the oil and refined product sector is a downgrading in intensity and very substantial eastward shift in the projected path of tropical storm Ernesto,” Barclays Capital analyst Kevin Norrish said on Tuesday.

“Its projected path now takes it over Florida and although some strengthening is expected after Ernesto moves into the Florida straits, markets have now discounted its significance.”

The market was also calmed by news that BP has resumed some lost output at its Prudhoe Bay oil field, where closure earlier this month due to a pipeline leak had sent London Brent crude prices soaring to record high.

According to a BP spokesman, Prudhoe was now pumping some 200,000 barrels per day (bpd) -- or around half its normal production of 400,000 bpd.

The British energy giant had last week slashed output at the troubled field to about a quarter of the normal level because of a new technical problem.

Prices on Tuesday were also weaker amid apparent willingness by Iran to negotiate over its disputed nuclear programme.

Analysts warn that Iran, the world's fourth biggest producer of crude, could disrupt its oil exports if hit by UN-backed economic sanctions over the programme.—AFP