Tuesday June 23, 06:55 PM
Oil prices stage rebound
LONDON (AFP) - Oil prices rebounded Tuesday as traders tracked the Iran crisis, and the weak US currency stimulated demand for dollar-priced crude, analysts said.
New York's main futures contract, light sweet crude for delivery in August, won 83 cents to 68.33 dollars a barrel.
London's Brent North Sea crude for August added 96 cents to 67.94 dollars per barrel.
Iran ruled out cancelling its disputed presidential vote on Tuesday, issuing a new warning to the main opposition leader and lashing out at UN "meddling" as it battles the most serious challenge to the Islamic regime in 30 years.
The nation is the world's third biggest crude exporter after Russia and Saudi Arabia and produces approximately 3.8 million barrels of oil per day.
As international alarm over the crisis mounted, Britain said it was expelling two Iranian diplomats after a similar move by Tehran while other European nations hauled in envoys to protest at the election and the repression of the opposition protests.
US President Barack Obama said he was watching how post-election turmoil in Iran "plays itself out" to see how it affects Tehran's prospects for engaging with the international community.
In the foreign exchange activity, the European single currency climbed past 1.40 dollars on supportive eurozone economic data ahead of this week's US Federal Reserve monetary policy meeting.
A struggling greenback makes dollar-priced oil cheaper for buyers holding stronger currencies, which tends to boost demand and lift prices.
Oil had earlier ducked underneath 67 dollars, in line with falling stock markets, as global economic recovery hopes were dampened, analysts said.
The market had also fallen as many traders sought to lock in profits from a recent rally that saw prices climb past 73 dollars.
"There is a sense that the selloff might have been overdone," said Phil Flynn of Alaron Trading.
The World Bank on Monday slashed its forecast for developing nations' economies, estimating growth at 1.2 percent this year while warning more measures were needed for a recovery to take hold.
Consequently, oil prices fell sharply Monday, losing more than two dollars in London and almost three dollars in New York.
"Market participants' confidence in an economic recovery (has) receded," said Nimit Khamar, energy market analyst with the Sucden brokerage in London.
"Investors will now be looking towards the (US) Federal Reserve meeting on Wednesday and the US housing data today and tomorrow for further indication on the outlook of the global economy."
Oil prices plunged from record highs of more than 147 dollars in July 2008 to about 32 dollars in December as the economic slowdown crushed demand for energy but the market has since clawed back ground on hopes for a recovery.
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