Crude prices climb after Monday fall

NEW YORK: Crude prices returned to their high Tuesday after a steep fall Monday as the Middle East scenario remained explosive with fighting between Israel and Hezbollah continuing unabated.
While analysts emphasize that the fighting should have no direct impact on oil supplies, the stance of Iran, which backs Hezbollah, that it may directly get into the conflict, is considered as a worrisome factor. This situation is in addition to the near stalemate in talks over Iran’s nuclear program and the country’s threat to halt its oil exports.
Besides the Middle East concerns, there are threats of oil supply disruptions in Nigeria and a possible revival of hurricane season in the Gulf of Mexico.
Price of light, sweet crude for August delivery rose 50 cents to $75.80 a barrel in electronic trading on the New York Mercantile Exchange. The front-month futures contract had slid $1.73 Monday to settle at $75.30 a barrel. Prices had touched a record $78.40 a barrel Friday in intra-day trading before closing at $77.03.
September Brent crude futures on London’s ICE Futures exchange rose 33 cents to $76.25 a barrel.
The situation in Middle East saw no signs of cessation Tuesday as Israeli continued its attack with warplanes bombing a Lebanese army base in south Beirut and on a coastal road north of the capital. Hezbollah retaliated by firing a rocket into the northern territory of Israel, though the rocket did not explode.
Meanwhile, a U.N. envoy, now in the core area of the fighting, said Monday after a meeting with Lebanese prime minister that he would present proposals to Israel to end the fighting. A senior Israeli officer was also quoted as saying the country would agree to a ceasefire if the militants withdrew from the border area with Israel and released the two captured Israeli soldiers. However, official sources disowned the statement.
Earlier, Italy, France and the U.K. endorsed a call by the United Nations for a military force to quell the conflict in Lebanon.
In the U.S., gasoline futures rose 1.17 cents to $2.297 a gallon Tuesday while heating oil prices rose 0.94 cent to $2.0288 a gallon. Natural gas futures were flat at $5.783 per 1,000 cubic feet.
The Organization of Petroleum Exporting Countries, which accounts for 40 percent of the world’s oil, had said it was concerned about rising prices and reiterated that it remains committed to “order and stability'’ in the global oil market.
The group’s daily output had risen 0.3 per cent to 29.58 million barrels in June, led by Iraq, which pumped an average 2.1 million barrels a day, OPEC said Monday. The group’s daily capacity will reach 34.3 million barrels by the end of 2007, a gain of a million barrels. The increase will help raise its spare capacity to more than 10 per cent, from 8 per cent in 2005, the group said in a monthly report.