TEHRAN (Fars News Agency)- Oil prices held steady Friday after a big overnight gain as the US government lobbied international powers not to back down on OPEC’s second largest producer, Iran, over its nuclear program.
The weakening dollar and estimates of stronger Chinese economic growth also continued to draw buyers back into the market.
Despite a report by 16 US intelligence agencies which endorsed the peaceful nature of Iran’s nuclear activities, at least at the present time, US Secretary of State Condoleezza Rice on Thursday urged Europe and Russia to ratchet up pressure on Iran to halt uranium enrichment and come clean about its nuclear programs.
Rice’s talks with European and Russian officials showed Washington remains committed to isolating Iran despite the new US National Intelligence Estimate contradicted years of assertions that Iran is secretly pursuing atomic weapons.
Energy traders worry that any conflict between the West and Iran will cut into oil supplies from the Middle East.
Light, sweet crude for January delivery dipped 9 cents to $90.14 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose $2.74 to settle at $90.23 a barrel Thursday.
Some analysts saw the gains as a delayed reaction to news from Wednesday, including OPEC’s announcement that it would hold production steady rather than increase output and a US government report that showed domestic crude inventories dropped sharply last week.
Thursday’s price jump also reinforced a view that last week’s steep drop in crude prices was just a minor setback on the road to $100 oil. Crude futures opened last week above $99 a barrel, but closed below $88 a barrel Wednesday.
The dollar fell against the euro Thursday, reversing a three-day rally that contributed to recent crude price declines. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Also supporting oil prices Thursday was the Organization for Economic Cooperation and Development’s revision of its forecast for China’s economic growth this year to 11.4 percent from an earlier estimate of 10.4 percent. Oil prices have risen steadily since 2003 in part because of growing demand from China and India.
Heating oil futures lost 0.5 cent to $2.54 a gallon while gasoline prices added 0.07 cent to $2.302 a gallon. Natural gas futures lost 1.1 cents to $7.319 per 1,000 cubic feet.
In London, January Brent crude fell 8 cents to $90.10 a barrel on the ICE Futures exchange.