Oil fell from a record high of $75.78 a barrel on Friday (July 7) on signs of a decrease in tension between the West and Iran, the world’s fourth largest oil exporter.
Reuters reported that Iran’s chief nuclear negotiator said he had a “positive impression” of a Western proposal for Iran to stop enriching uranium in return for a package of incentives. Oil had earlier risen due to strong demand in the United States.
A barrel of light crude retreated to $73.90, down $1.24, on the New York Mercantile Exchange. London Brent crude was down 64 cents at $73.44, having earlier hit a record $75.09.
Prices drew early support from a U.S. government report on Thursday showing gasoline demand grew by 1.4% in the last four weeks from a year ago. Data released on Friday showed U.S. jobless figures stayed at a five-year low in June.
“While the global economy is staying strong, demand is going to be very supportive,” said Tony Dolphin of Henderson Global Investors.
“I don’t see oil falling back a lot. I think it is likely to remain in a range and perhaps gradually drift higher.”
Oil in New York is up 23% this year because of supply cuts in Nigeria, the dispute over Iran’s nuclear work and a flood of investment fund money into commodities. North Korea’s missile tests this week added to global tensions.
“North Korea has been a minor or secondary factor in what’s happened to oil this week,” said Mike Wittner of investment bank Calyon. “The main factor has been new money coming in.”