April 3 (Bloomberg) -- Crude oil fell in New York on signs Iran may step back from a confrontation with the U.K. over its detention of British naval personnel.
Oil dropped after Iran's National Security Council chief, Ali Larijani, said his country doesn't see a need to try the 15 U.K. sailors and marines captured in the Persian Gulf on March 23. Gasoline futures declined for a third day on speculation the drawdown of U.S. fuel stockpiles slowed last week as refiners raised operating rates.
``The tension between the western countries and Iran is relaxing,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. ``Contracts are being liquidated because the gasoline situation is easing as the refineries are starting to come back and produce more before the driving season.''
Crude oil for May delivery fell as much as 45 cents, or 0.7 percent, to $65.49 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $65.72 at 11:48 a.m. in Singapore.
The contract rose 7 cents to $65.94 a barrel yesterday, after trading as high as $66.69. Prices have settled within 13 cents of $66 in each of the past three sessions.
``We could probably drop a couple of dollars'' if tomorrow's inventory report shows U.S. gasoline stockpiles rose last week, said Tom Hartmann, commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.
In London, Brent crude oil for May settlement was at $68.65 a barrel, down 9 cents, in electronic trading on the ICE Futures exchange at 11:23 a.m. Singapore time.
Gulf Tensions
Almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf. Iran says the British sailors, part of a joint U.K.-U.S. task force in the Gulf, entered its territorial waters while searching merchant vessels.
The dispute can be resolved diplomatically, and an international delegation could determine the issue around the breach of Iran's waters, Larijani said in an interview on Britain's Channel Four News.
The U.K. government is ``studying'' Larijani's comments and will follow them up with Iranian authorities, the Foreign Office said in a statement from London yesterday.
``They were never going to put these guys on trial,'' Altavest's Hartmann said. ``This is just about reasserting their power in the Gulf again, not only to Westerners but also to their Arab neighbors.''
Gasoline Demand
The Energy Department's weekly inventory report tomorrow will probably show gasoline stockpiles declined by 350,000 barrels last week, as refiners raised their plant utilization to 87.5 percent, the highest since the week ended Jan. 12, based on the median estimate from a Bloomberg News survey of 10 analysts. Supplies fell an average 2.4 million barrels in each of the department's past seven reports.
``We need to see a good three weeks of gains before we could say they're really recovering'' and gasoline is likely to be well-supported at $2 a gallon, Altavest's Hartmann said. ``A recovery in refinery runs will certainly help.''
Gasoline for May delivery declined as much as 0.98 cent, or 0.5 percent, to $2.0330 a gallon in after-hours trading. Prices have fallen 2 percent in the past three days.
Corn, which can produce gasoline additive ethanol, fell the most in seven months on signs U.S. farmers will plant the most acreage in 63 years. The farmers are responding to a 10-year high in prices driven in part by demand for ethanol.
``Farmers want to boost production as much as possible,'' said Mitsui's Emori. ``When more ethanol is available in the market it will push the gasoline price down in the future.''
Crude-oil stockpiles probably gained 1.38 million barrels from 328.4 million the prior week, according to the analyst survey. Inventories rose two of the past three reports and were 6.2 percent higher than the five-year average on March 16.
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Crude Oil Falls as Iran, U.K. Plan Talks Over British Captives
April 3 (Bloomberg) -- Crude oil fell after U.K. Prime Minister Tony Blair said the U.K will negotiate with Iran on the release of 15 British captives, easing concern the dispute would disrupt crude supplies from the Middle East.
Britain wants to maintain ``peaceful and calm negotiations'' to free sailors and marines, Blair said today. Iranian Vice President Parviz Davoudi said he expects the conflict to be resolved ``soon,'' Agence-France Presse reported.
``We are getting some softer tones,'' Kevin Kerr, the president of Kerr Trading International, said from Wilton, Connecticut. ``That's pushed the oil back down a bit.''
Crude oil for May delivery declined as much as $1.21, or 1.8 percent, to $64.73 a barrel in after-hours electronic trading on the New York Mercantile Exchange and was at $65.07 at 1:15 p.m. London time. Oil has risen about 5.4 percent since the sailors and marines were seized, on March 23.
Brent crude oil for May settlement fell as much as 94 cents, or 1.4 percent, to $67.80 a barrel in electronic trading on the ICE Futures exchange. It was $68.10 at 1:17 p.m. in London.
The U.K. Foreign Office said the government would contact Iran's leaders today after Ali Larijani, the head of the Iranian Supreme National Security Council, said yesterday there was ``no need for any trial'' of the British crews. His comments provide a foundation for ``a diplomatic solution,'' the Foreign Office said.
The dispute between the U.K. and Iran, the site of the world's second-largest oil and gas reserves, threatens to disrupt the flow of crude through the Strait of Hormuz at the mouth of the Persian Gulf. Almost a quarter of the world's oil flows through the strait.
``Should the situation in Iran calm down, prices should come back again,'' said Wolfgang Kraus, chief energy and commodities trader at BayernLB in Munich. ``The oil price has added about $6 since the beginning of the Iran crisis.''
Location Disputed
Britain says the two boats Iran seized were 1.7 nautical miles (3.1 kilometers) inside Iraqi waters when they were halted in the Shatt al-Arab waterway. Iran says they were half a kilometer inside its territorial waters.
Iranian President Mahmoud Ahmadinejad yesterday promised ``news'' on the nation's nuclear program, a week after the United Nations Security Council voted for tougher sanctions to push the country to suspend its nuclear work. Ahmadinejad postponed a press conference scheduled for today until tomorrow, Iran's Ministry of Culture and Islamic Guidance said.
``The tone between Iran and the U.K. over the sailors has definitely taken a turn for the better,'' said Olivier Jakob, the managing director at Zug, Switzerland-based Petromatrix GmbH. ``While Iran will remain an underlying support as long as the nuclear standoff continues, we would expect to lose some of the premium linked to the sailors.''
UN Sanctions
The UN Security Council voted unanimously March 24 for a resolution freezing some Iranian assets and gave Iran 60 days to halt uranium enrichment. Iran has defied two UN resolutions demanding it stop enriching uranium, which the U.S. and its allies say is aimed at building nuclear weapons. Iran says the program is for developing nuclear power for electricity.
U.S. fuel supplies probably fell last week, a Bloomberg News survey indicated. Distillates, which include heating oil and diesel, probably fell 800,000 barrels in the week ended March 30 from 118 million the prior week, the survey showed. Gasoline supplies probably declined 350,000 barrels from 210.2 million.
``If these forecasts, especially for gasoline, turn out to be accurate, this would likely have a bullish effect on the market as it would mean eight consecutive draws in gasoline stocks,'' Vienna- based PVM Oil Associates GmbH said in a report today.
Crude stockpiles rose 1.38 million barrels last week from 328.4 million barrels the week before, according to the survey.
Expressed in U.S. dollars, the price of the U.S. benchmark crude, West Texas Intermediate, has fallen about 1.5 percent in the past 12 months. Oil has fallen about 11 percent in euros and 12 percent in British pounds, and has dropped 1 percent in yen.
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