Oil Prices Fall Below $71US a Barrel

Oil prices fell for the fourth straight day on Thursday, dipping below $71 US a barrel after China sought to cool its economic growth by raising a key interest rate and the World Bank tentatively resolved a dispute with Chad, which had threatened to shut off an oil pipeline.

The most serious geopolitical concern out there is the West's diplomatic standoff with Iran, OPEC's second largest oil producer, over its nuclear ambitions.

Oil analyst Phil Flynn of Alaron Trading Corp. in Chicago said the move by China "may slow demand a little bit" but that Beijing's energy consumption would continue to rise at a rapid rate.

In other news that seemed to help cool prices, Chad and the World Bank have reached an agreement resolving a four-month dispute over how the central African country uses its revenues from a World Bank-backed oil program. The World Bank had frozen hundreds of millions of dollars in oil royalties banked in London and aid to Chad, which retaliated by threatening to shut off an oil pipeline carrying more than 100,000 barrels of crude per day.

But there is still plenty of unease on world oil markets about supply disruptions in Nigeria and the Gulf of Mexico, and fears of possible supply problems in Iran if its dispute with the West boils over.

The leaders of Russia and Germany urged Iran to fulfill its international nuclear obligations Thursday, a day before a UN Security Council deadline for Iran to stop enriching uranium. But Iran's hardline President Mahmoud Ahmadinejad said no one could make Tehran give up its nuclear technology, warning that the United States and its European allies will regret their decision if they "violate the rights of the Iranian nation."

If this close-to-stagnation in gasoline consumption becomes a new trend - potentially related to retail prices of close to $3 a gallon - summer shortages would become more unlikely.