By The Associated Press
NEW YORK, N.Y. – Oil prices fell below US$97 a barrel Monday on signs that the U.S. and Iran may restart nuclear negotiations.
In midday trading in New York, benchmark West Texas Intermediate crude for March delivery was down $1.43 to US$96.34 a barrel.
Brent crude, the benchmark used to set prices for oil imported by many U.S. refineries, was down $1.04 to US$115.72 in London.
Oil prices have been rising steadily since they traded near $86 a barrel in mid-December as hopes rose for an improving world economy. When economies grow, shippers and travellers use more gasoline and diesel, pushing up demand for the oil used make those fuels.
And for much of the past two years, tensions in the Middle East have helped keep oil prices high by crimping supplies and raising fears that supplies could be cut even further.
Western countries have taken steps to stem the flow of crude out of Iran to try to convince the country to stop what the West says is a program to develop a nuclear weapon. In response Iran has threatened to disrupt the flow of oil from the Middle East.
On Saturday, while on a visit in Germany, U.S. Vice-President Joe Biden said Washington was ready for direct talks with Iran over its nuclear program, which Tehran insists is only for peaceful purposes. The Iranian foreign minister on Sunday welcomed Biden’s gesture but did not commit to taking up the offer.
Negotiations between Iran and the five permanent members of the UN Security Council plus Germany have made little progress and analysts welcomed the possibility of direct talks.
“It seems that small steps in that direction have started,” said Olivier Jakob of Petromatrix in Switzerland. “The U.S. had its election, Israel had its election but Iran still needs to go through its elections in June and that could still be a delay in the formal process but already a small change of dynamics will be important.”
If Iranian oil that now is embargoed can return to the market, supplies will rise and prices could fall.
In other energy futures trading on the New York Mercantile Exchange, wholesale gasoline fell three cents to US$3.02 a U.S. gallon (3.79 litres), heating oil lost one cent to US$3.15 a gallon and natural gas rose three cents to US$3.34 per 1,000 cubic feet.