Expectations of rising fuel stockpiles and long drawn out negotiations with Iran caused crude oil to trade near a 6 month low of $61.66 a barrel in New York.
A statement by President Bush that he will give European diplomacy a chance to resolve the dispute with Iran and reports that
US fuel stockpiles have extended their gains from the past month caused the biggest oil price fall in 4 months.
Crude oil fell by $2.14 to $61.66 a barrel, the lowest close since March 21 and the biggest one-day decline since May 15. In after-hours electronic trading on the Nymex, crude oil for October delivery went up by 13 cents.
Hedge funds may also be selling futures after seeing others lose money in the energy market and as the pace of the decline in oil has accelerated, analysts and traders said.
Gasoline for October delivery was at $1.5090 a gallon in after-hours trading, after falling 4.8 percent to $1.5038 yesterday, the lowest close since Feb. 22.
October heating oil was at $1.6980 a gallon, after falling 2 percent to $1.6916 yesterday, the lowest close since March 10.
The UN-Iran dispute looks like it will be a long drawn out affair.
The US seems to have moved over to the European position with French President Chirac proposing the suspension of plans for sanctions if Iran also suspends its enrichment during negotiations.
Bush said that the US would "come to the table" once Iran suspended enrichment and that there was "no objection" to Iran pursuing a truly peaceful nuclear program.
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