Oil prices dipped below $67 on Friday

SINGAPORE, Mar 31: Oil prices dipped below on Friday after a rally on worries over gasoline stocks in the United States and after OPEC-member Iran rejected a United Nations demand to halt uranium enrichment.

U.S. light crude traded down 36 cents at .79 a barrel by 0347 GMT, after gaining 70 cents on Thursday to reach the highest level since early February. London Brent crude traded up 13 cents at .59 a barrel.

''People in Asia are not that convinced the market is that strong,'' said Tony Nunan, risk management manager at Mitsubishi Corp. in Tokyo. ''But if you can't beat them, join them -- the market is concentrating on the bullish news.'' Prices have climbed 4 percent this week as tension increased over Iran's nuclear programme and militants in Nigeria warned of further attacks to oil facilities, while U.S. gasoline stocks fell steeply ahead of peak summer demand.

The world's powers told Iran on Thursday it must heed a U.N.

call to curb its nuclear programme or face sanctions, but Tehran refused to budge and said it would not stop uranium enrichment.

Britain said the council might pass a legally binding resolution if Iran did not comply, opening the way to future measures that could include sanctions. Dealers fear the world's fourth-largest crude exporter could retaliate by cutting supply.

''It probably won't affect Iran flows, but the impact of that small possibility would be so huge you've got to factor it in,'' said Nunan. ''There's also the long-term impact on production with very little investment flow to Iran.'' Oil dealers were also bracing for the possibility that a fresh flush of big-fund money that has lifted metals markets to new highs could spill over into the energy complex as the second quarter begins. Prices soared around the turn of the first quarter as fund investors piled into energy.

FRESH FUND FLOW

''There were continued fund flows into commodities overnight, as end-quarter window-dressing occurs,'' said David Thurtell of the Commonwealth Bank of Australia.

Market fundamentals were given a fillip this week by thinning gasoline stocks, coming as the U.S. switches from water-polluting gasoline additive MTBE to ethanol, which analysts worry could trigger price spikes and regional supply disruptions.

Gasoline futures dropped back 1.1 percent after a rally on Thursday to a five-month high of around

SINGAPORE, Mar 31: Oil prices dipped below $67 on Friday after a rally on worries over gasoline stocks in the United States and after OPEC-member Iran rejected a United Nations demand to halt uranium enrichment.

U.S. light crude traded down 36 cents at $66.79 a barrel by 0347 GMT, after gaining 70 cents on Thursday to reach the highest level since early February. London Brent crude traded up 13 cents at $66.59 a barrel.

''People in Asia are not that convinced the market is that strong,'' said Tony Nunan, risk management manager at Mitsubishi Corp. in Tokyo. ''But if you can't beat them, join them -- the market is concentrating on the bullish news.'' Prices have climbed 4 percent this week as tension increased over Iran's nuclear programme and militants in Nigeria warned of further attacks to oil facilities, while U.S. gasoline stocks fell steeply ahead of peak summer demand.

The world's powers told Iran on Thursday it must heed a U.N.

call to curb its nuclear programme or face sanctions, but Tehran refused to budge and said it would not stop uranium enrichment.

Britain said the council might pass a legally binding resolution if Iran did not comply, opening the way to future measures that could include sanctions. Dealers fear the world's fourth-largest crude exporter could retaliate by cutting supply.

''It probably won't affect Iran flows, but the impact of that small possibility would be so huge you've got to factor it in,'' said Nunan. ''There's also the long-term impact on production with very little investment flow to Iran.'' Oil dealers were also bracing for the possibility that a fresh flush of big-fund money that has lifted metals markets to new highs could spill over into the energy complex as the second quarter begins. Prices soared around the turn of the first quarter as fund investors piled into energy.

FRESH FUND FLOW

''There were continued fund flows into commodities overnight, as end-quarter window-dressing occurs,'' said David Thurtell of the Commonwealth Bank of Australia.

Market fundamentals were given a fillip this week by thinning gasoline stocks, coming as the U.S. switches from water-polluting gasoline additive MTBE to ethanol, which analysts worry could trigger price spikes and regional supply disruptions.

Gasoline futures dropped back 1.1 percent after a rally on Thursday to a five-month high of around $2 a gallon.

By contrast crude stocks in the United States are ample, rising to their highest level in seven years amid high OPEC output, but disruptions in producer nations and geopolitical worries have helped keep oil above $60 a barrel for more than a month.

Nigerian production has been cut by a quarter due to violence in the Niger Delta, though some of the lost output returned on Thursday when Italy's Agip removed a force majeure on exports from its Brass terminal.

The International Energy Agency (IEA) told Reuters it would not order an emergency stocks release despite the prolonged Nigeria outage as other OPEC producers had filled the shortfall.

Oil prices are about $4 below the record $70.85 hit last year when hurricanes knocked out a quarter of U.S. energy production, having climbed from below $20 in a four-year rally driven by fast-growing demand and stretched production.

Warm ocean temperatures foretell another active Atlantic hurricane season but not likely as busy as the record-breaker that spawned Hurricane Katrina and other devastating storms last year, a top hurricane forecaster said on Thursday.

REUTERS

a gallon.

By contrast crude stocks in the United States are ample, rising to their highest level in seven years amid high OPEC output, but disruptions in producer nations and geopolitical worries have helped keep oil above a barrel for more than a month.

Nigerian production has been cut by a quarter due to violence in the Niger Delta, though some of the lost output returned on Thursday when Italy's Agip removed a force majeure on exports from its Brass terminal.

The International Energy Agency (IEA) told Reuters it would not order an emergency stocks release despite the prolonged Nigeria outage as other OPEC producers had filled the shortfall.

Oil prices are about below the record .85 hit last year when hurricanes knocked out a quarter of U.S. energy production, having climbed from below in a four-year rally driven by fast-growing demand and stretched production.

Warm ocean temperatures foretell another active Atlantic hurricane season but not likely as busy as the record-breaker that spawned Hurricane Katrina and other devastating storms last year, a top hurricane forecaster said on Thursday.

REUTERS