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Crude oil prices follow stock markets down

CRUDE oil prices followed stock markets lower yesterday as a wave of speculative buyers looked for direction after the Federal Reserve said the struggling economy would hold back inflation this year.

During the past few months, investors had snapped up crude barrels to protect themselves from a weaker dollar, helping oil prices rise to eight-month highs despite a huge surplus in the U.S.

Benchmark crude for August delivery fell US$1.07 cents to settle at US$69.16 a barrel on the New York Mercantile Exchange. In London, Brent prices fell 86 cents to settle at US$68.92 a barrel on the ICE Futures exchange.

Political turmoil in Iran and Nigeria also continued to put pressure on oil prices. Both countries are major oil producers, and a conflagration in Iran could affect millions of barrels of exports in the Persian Gulf.

"Iran is a real wild card," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

"I think we've peaked with gasoline prices at least, but that assumes that nothing major is going to happen over there," he said.

Nigerian militants said they attacked a Royal Dutch Shell wellhead in the southern Delta state in response to a government operation against them, hours after the nation's president offered them amnesty in exchange for laying down their arms.

The militant Movement for the Emancipation of the Niger Delta has been battling for a larger share of the country's oil revenues.

Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore, said the oil price will likely rise to US$75 a barrel before drifting to near US$60 by the end of the year as investors become disillusioned by a sluggish economic recovery.
In other Nymex trading, gasoline for July delivery fell 2.42 cents to settle at US$1.8742 a gallon and heating oil lost 4.6 cents to settle at US$1.7303 a gallon. Natural gas for July delivery rose 11.6 cents to settle at US$4.105 per 1,000 cubic feet.


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