As an engine from the Denver Fire Department heads by to a call in the background, a sign with the prices for the various grades of gasoline available at a downtown Denver service station stands along the thoroughfare. Gas prices continue to creep up in Colorado with stations posting a two-cent per gallon increase over the past weekend as the Labor Day holiday approaches. (AP Photo/David Zalubowski)
Oil Mixed As Iran Delivers Response
Tuesday, August 22, 2006 9:55 AM EDT
The Associated Press
By GEORGE JAHN
VIENNA, Austria (AP) — Oil prices were mixed Tuesday as Iran delivered its formal response to a U.N. plan meant to encourage it to suspend uranium enrichment, after the nation indicated earlier this week that it will not do so.
State-run television in Iran reported that Iran's top nuclear negotiator, Ali Larijani, hand delivered Iran's response to ambassadors from Britain, China, Russia, France, Germany and Switzerland who are meeting in Tehran.
A formal rejection by Tehran of a freeze of its enrichment program would likely send prices higher. Markets remain concerned about hurricanes in the Gulf of Mexico that could affect production and refining facilities. Still, expectations that U.S. inventory figures will reveal relatively healthy gasoline stocks could brake bullish sentiment.
Light sweet crude for September delivery fell 5 cents to $72.40 a barrel on the New York Mercantile Exchange by afternoon in Europe. October Brent crude on London's ICE Futures exchange rose 18 cents to $73.56 per barrel.
Gasoline and heating oil futures were little changed at $1.94 and $2.0295 a gallon (3.8 liters). Natural gas futures were steady at $6.639 per 1,000 cubic feet.
The U.N. Security Council passed a resolution last month calling for Iran to suspend uranium enrichment by Aug. 31 or face the threat of economic and diplomatic sanctions. Enriched uranium can be used to create the fissile core of nuclear warheads.
Iran, which has insisted its nuclear program is aimed at producing energy, not weapons, has said it will respond in writing by Tuesday.
But on Monday, its Supreme Leader Ayatollah Ali Khamenei said Tehran will pursue nuclear technology. In Austria, diplomats and U.N. officials said Iran has turned away U.N. inspectors wanting to examine its underground nuclear site in an apparent violation of the Nuclear Nonproliferation Treaty. The officials spoke on condition of anonymity.
"Fears remain that if Iran rejects the proposals ... and the U.N. imposes sanctions, the world's fourth-largest producer will shut off exports, forcing producers to dip into holding stocks," said Paul Harris, oil market analyst at Bank of Ireland Global Markets.
"Coincident with the Iranian crisis is the development of Tropical Storm Debby in the Gulf of Mexico, which will be monitored by the market as the weather system progresses," Harris said.
Elsewhere in the Middle East, a cease-fire in Israel and Lebanon was in its seventh day, although Israel on Saturday conducted a pre-dawn commando raid deep into Lebanon's eastern Bekaa Valley, prompting U.N. Secretary-General Kofi Annan to declare the Israelis in violation of the Security Council truce resolution.
Oil prices hit a record high of $78.40 a barrel on July 14, two days after fighting erupted in Lebanon.
They fell back last week as supply fears abated after the cease-fire and as BP PLC restored half of the production at the Prudhoe Bay oil field in Alaska, which was disrupted earlier this month because of pipeline corrosion. On Friday, prices dipped below $70 a barrel in intraday trading for the first time in almost two months.
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