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Oil hovers above $107 as Iran nuclear talks set

Benchmark oil for May delivery was up 9 cents to $107.12 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

The Associated Press


SINGAPORE — Oil prices hovered above $107 a barrel Tuesday in Asia as an agreement between Iran and six world powers to meet next month raised hopes of a negotiated resolution to a dispute over the Middle Eastern country's nuclear program.

Benchmark oil for May delivery was up 9 cents to $107.12 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract was up 16 cents to settle at $107.03 per barrel in New York on Monday.

Brent crude for May delivery was down 9 cents at $125.56 per barrel in London.

Iran and the six nations — the United States, Britain, France, Germany, Russia and China — have agreed to meet on April 13 for new talks about Tehran's nuclear program, diplomats told The Associated Press on Monday. President Barack Obama said Sunday that there is still time to resolve the dispute over Iran nuclear program diplomatically, but that the window is closing.

Crude has jumped from $75 in October amid growing concern a military strike by Israel or the U.S. against Iran's nuclear facilities would disrupt global crude supplies.

Rising crude inventories in developed countries and quickening inflation and weaker consumer demand caused by soaring fuel costs could also bring oil prices lower, Morgan Stanley said.

"With crude reaching record levels in many currencies, catalysts are finally emerging for weaker prices in the second quarter," the bank said in a report. "Fundamentals warrant a modest price correction."

Other analysts expect worries about Iran will keep oil prices elevated. Iran is the world's third-largest crude exporter, and reports last week said its oil sales abroad fell sharply last month, suggesting sanctions imposed by Western powers have begun to hurt Iran's economy.

Saudi Arabia has pledged to increase production to replace Iran's lost output, but that would leave little global spare capacity, Citigroup said.

"This has left markets extremely jittery," Citigroup said in a report. "The inflammatory rhetoric between the U.S., Israel and Iran shows no sign of abating, and prices are likely to remain under pressure."

Oil traders brushed off a jump in global stock markets. Federal Reserve Chairman Ben Bernanke suggested Monday that the U.S. central bank would continue its policy of low interest rates to help spur job creation and economic growth.

The Dow Jones industrial average rose 1.2 percent Monday and Asian stock markets advanced Tuesday.

Traders will be closely watching the latest data on housing and consumer confidence later Tuesday for clues about the strength of the U.S. economy.

In other energy trading, heating oil was up 0.2 cent at $3.25 per gallon and gasoline futures fell 0.3 cent at $3.40 per gallon. Natural gas slid 0.9 cent at $2.22 per 1,000 cubic feet.