Market unfazed

12 May 2006
The 18-page letter written earlier this week by the Iranian President Mahmoud Ahmadinejad to his US counterpart George Bush on finding new solutions to their differences, only had a marginal impact on oil prices. Spot Brent was traded at $72.4 a barrel on 10 May, compared with $74.28 a week earlier.

Uncertainty continues to loom, with President Bush insisting that the letter had failed to address international concerns about Iran's nuclear program. 'It [the letter] did not answer the main question that the world is asking and that is, When will you get rid of your nuclear program?',' Bush said in his first public comment on the letter. 'Britain, France, Germany - coupled with the US and Russia and China have all agreed that the Iranians should not have a weapon or the capacity to make a weapon,' he said.

Meanwhile, stockpiles of oil products in the US have increased, according to the weekly inventories report announced by the US Department of Energy (DoE). In the week ending 9 May, gasoline stocks increased a robust 2.4 million barrels, compared to 1 million barrels a week earlier. In the same period, crude oil reserves increased 300,000 barrels to 347.0 million barrels. 'US crude stocks are now at their highest level since May 1998, ,' the DoE report said.

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