Crude oil rose in New York after the U.S. said a letter from Iran's president hasn't reduced its determination to halt the Islamic republic's nuclear research.
The letter, which Iran claims proposes ways to improve relations, does nothing to address U.S. concerns, White House spokesman Scott McClellan said, without detailing its content. Oil has risen 15 percent this year on concern that the dispute may disrupt supplies from the world's fourth-largest producer.
``Oil rebounded after the U.S. dismissed the letter,'' said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd. in Hong Kong. That ``removed the slim chance there could be direct negotiations between with Iran.''
Crude oil for June delivery rose as much as 39 cents, or 0.6 percent, to $70.16 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. It was at $69.91 at 1:09 p.m. in Singapore, 34 percent higher than a year ago.
Oil prices have closed within 23 cents of $70 the past three sessions. Yesterday, the June contract fell as much as 2.8 percent to $68.25 a barrel, the lowest intraday price since April 13, after the existence of Ahdmadinejad's letter was reported. Oil closed at $69.77 a barrel, down 42 cents.
Oil reached a record $75.35 on April 21 and 24 on concern oil supplies from Iran, the world's fourth-largest producer, may be disrupted if the United Nations imposes sanctions to halt the nation's uranium enrichment.
The U.S., France and the U.K. are pressing the UN Security Council to take tough line with Iran to stop research the countries said will be used to develop nuclear weapons.
Opposition from China, Russia and other members of the 15- state council, has prompted a re-drafting of the proposed resolution, which will be circulated this week, U.K. Ambassador Emyr Jones Parry said yesterday. A vote should be possible by May 12, U.S. Ambassador John Bolton said.
Ahmadinejad's 18-page letter, conveyed through the Swiss Embassy, dealt with history, philosophy and religion, U.S. Secretary of State Condoleezza Rice told the Associated Press.
The letter ``isn't addressing the issues that we're dealing with in a concrete way,'' Rice said, according to AP.
Iran, the biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, pumped 3.85 million barrels of crude oil a day last month, according to a Bloomberg News survey of oil companies, producers and analysts. The U.S. doesn't import oil from Iran and has had sanctions on Iran since the Islamic Revolution in 1979.
Oil prices plunged 6.3 percent in two days last week after a May 3 Energy Department report showed U.S. gasoline stockpiles rose for the first time in nine weeks.
Supplies probably gained another 1.1 million barrels last week, based on the median forecast from a Bloomberg News survey of 10 analysts. Stockpiles held 202.7 million barrels the week ended April 28, or 2.3 percent below the five-year average.
``If we get a big build in unleaded that may beat the heck out of this market,'' Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California said. ``We're going to get down somewhere between $65.50 and $66.50 and then we're going straight back up again.''
The department will publish its report tomorrow at 10:30 a.m. in Washington.
It will probably show U.S. oil stockpiles declined by 575,000 barrels last week, according to the analyst survey. Oil inventories rose 0.5 percent to 346.7 million barrels the week ended April 28, 10 percent higher than the five-year average for the week, the department reported on May 3.
``There is no shortage of oil for prompt delivery,'' Mark Routt, an analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts, said yesterday. ``There is some concern about future supply problems but that could dissipate.''
Crude oil for July delivery rose 11 cents to $71.42 a barrel in after-hours trading, a $1.51 premium over the June contract. The August contract rose 12 cents to $72.41 a barrel.