Tensions surrounding Iran election fails to boost to crude
TOKYO (MarketWatch) -- Crude-oil futures edged lower Monday in electronic trading on Globex, as concern over ample global supplies and rising production offset any potential support from the presidential election in Iran, the world's fourth-largest oil producer.
Crude for July delivery was down 44 cents at $71.60 a barrel on Globex by the afternoon in Tokyo.
"Stocks of oil are high all around the world -- which suggests that on a supply/demand basis, oil prices should fall," said James Williams, an economist at WTRG Economics.
"However, crude prices are supported because investors are using oil as a hedge against the dollar and inflation," he said.
Oil futures ended last week with a gain of 5.3% on the New York Mercantile Exchange. But for Friday's trading session, July crude fell 64 cents to close at $72.04 a barrel on Nymex, down for the first time in four sessions after OPEC said it increased May output for a second month.
The Organization of the Petroleum Exporting Countries said in a monthly report Friday that May output from its 12 members averaged 28.27 million barrels a day, up 135,000 barrels from a month ago. See full story on OPEC production.
On Monday, oil prices extended their losses despite protests in Iran following the nation's presidential election Friday, in which President Mahmoud Ahmadinejad scored a controversial victory.
If the "turmoil over the Iranian election -- protests and all" happened a year ago, prices would be soaring, said Williams. The tension would have raised a "small potential of a supply interruption" and sent prices up by $5 to $10, he said.
But "maybe it's the news about the Khurais oil field coming on line" that's kept oil prices from climbing, he said. Saudi Arabia started production at the Khurais oil field in the eastern part of the nation last week, according to news reports.
"That should add to spare production capacity, which is already up 3 million barrels from last year," said Williams.
