Oil steady in Asia as Iran nuclear deadline nears
Friday, 01 August 2008

AP, SINGAPORE  -- Oil prices were steady Thursday in Asia after crude jumped more than $4 overnight as Iran vowed to continue its nuclear program and a U.S. agency reported America's gasoline stocks unexpectedly fell last week.

Only days remain until a deadline expires for Tehran to show it will stop expanding its uranium enrichment program, at least temporarily, or face the threat of new U.N. sanctions.

But there were no signs Wednesday that Tehran was willing to bend as Iranian officials, including supreme leader Ayatollah Ali Khamenei, pledged to continue the country's nuclear program.

''We are not giving up our nuclear activities, including enrichment,'' said Ali Ashgar Soltanieh, Iran's top representative to the International Atomic Energy Agency.

Also Wednesday, more than 100 nonaligned nations backed Iran's right to peaceful uses of nuclear power.

''It's quite likely that tensions around Iran's nuclear program will again become an issue for the market,'' said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney. ''The deadline for Iran to respond is ticking away.''

Light, sweet crude for September delivery rose 4 cents to $126.81 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract soared $4.58 to settle at $126.77 a barrel on Wednesday.

In London, September Brent crude was down 9 cents at $127.01 a barrel on the ICE Futures exchange.

Crude has fallen over the last three weeks from a record high of $147.27 on July 11, in part, on expectations that the spike in prices over the last year has begun to dampen U.S. demand for gasoline.

But the Energy Information Administration said Wednesday in its weekly inventory report that U.S. gasoline supplies fell 3.5 million barrels last week. Analysts surveyed by energy research firm Platts expected gasoline supplies to increase by 400,000 barrels.

Gasoline stocks had risen in three previous three weeks.

''That weekly data series is very useful, but very erratic week to week,'' Moore said. ''I hesitate to read too much into the stocks decline.''

In other Nymex trading, heating oil futures rose 0.37 cents to $3.524 a gallon (3.8 liters) while gasoline prices were steady at $3.1351 a gallon. Natural gas futures rose 1.9 cents to $9.270 per 1,000 cubic feet.

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