April 06, 2007	Friday	Rabi-ul-Awwal 17, 1428

LONDON, April 5: World oil prices slid on profit-taking on Thursday ahead of the Easter holiday weekend, reversing earlier gains that were linked to a massive plunge in US motor fuel reserves, traders said.

They also expressed relief that the two-week standoff between Britain and key crude producer Iran was at an end. The 15 British naval personnel held by Iran returned to London on Thursday, overjoyed at their surprise release.

In late London trades, the price of Brent North Sea crude for May delivery fell 30 cents to $68.10 in electronic deals.

New York’s main oil futures contract, light sweet crude for delivery in May, shed 24 cents to $64.14 in floor trading.

Prices had traded in positive territory for much of Thursday as dealers digested news that US gasoline reserves plummeted by five million barrels last week -- far more than market expectations for a drop of just 300,000 barrels.

“The primary driver at the moment is the data that came out, it wrong-footed the market,” Bank of Ireland analyst Paul Harris said.

“The fact it was so different from market expectations was hugely relevant coming ahead of the US driving season,” Harris said.

Motor fuel stocks are being closely watched before the driving season, which starts next month, when many Americans hit the roads for their summer holidays.

Crude futures had struck a seven-month peak of $69.58 per barrel in London on Monday as the crisis with Iran, which is the world’s fourth biggest oil producer, sparked fears that the Islamic republic could disrupt exports.

But prices tumbled as low as $66.93 in London and $63.56 in New York on Wednesday after Iranian President Mahmoud Ahmadinejad defused the crisis by pardoning the 15 sailors and marines as a “gift” to the British people.

“Prices have eased due to the definite, peaceful resolution of the row between Britain and Iran,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

“But the market is still supported by enough fundamental factors to keep prices from sliding too far down, so the easing has been rather modest.”

Among the factors supporting higher prices was a sharper-than-expected fall in US gasoline or petrol inventories, recent US refinery outages and lingering concerns over Iran’s nuclear programme, he added.

High oil prices are the result of geopolitical tensions, rather than a shortage of crude supplies, according to Opec ministers gathered for an oil industry conference in Paris on Thursday.

“The high prices of late are due to the geopolitical situation. It has nothing to do with the fundamentals,” Opec President Mohammed al-Hamili, who is also oil minister for the United Arab Emirates, said on the sidelines of the conference.

But Claude Mandil, the head of the International Energy Agency, an energy watchdog for rich countries, said that prices were too high and that supply was “a bit too low.”—AFP