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LONDON - Oil stalled on Friday after a nearly two-week rally on tensions over Iran's capture of British military personnel and worries over US petrol supplies ahead of summer driving season.
US crude settled down 16 cents to US$65.87 a barrel, after rising 3 per cent to a
six-month closing high the previous session. Prices have risen more than 16 per cent since March 19.
London Brent, meanwhile, rose 22 cents to US$68.10 a barrel. Earlier in the session, the European benchmark rose briefly above US$69 for the first time since September 2006.
"We had a very strong rally yesterday and for the last 10 days, so there is some profit-taking," said Olivier Jakob, an analyst at Petromatrix. "The market is driven by Iran and can go up or down easily by 50 cents depending upon the next headline."
A week after Iran detained 15 British sailors and marines in the Gulf, Britain is still trying to secure their release. It plans to urge the European Union to help isolate Iran at a meeting of EU ministers starting on Friday.
The issue, coupled with new UN sanctions imposed on Tehran at the weekend over its nuclear programme, fed traders' fears about a disruption in exports from Iran, the world's fourth-largest exporter, or through the Strait of Hormuz, conduit for roughly two-fifths of all globally traded oil.
At a time of increased sensitivity, the United States sent two carriers to the Gulf but said "they are not there to provoke any kind of conflict with Iran."
The Iran tensions come as energy traders eye dwindling stockpiles of petrol in the United States leading into the summer driving season.
US petrols supplies have fallen about 7.5 per cent since early February, due in part to slow production from refiners undergoing seasonal maintenance.
French strike meeting
A strike, in its 17th day, at the French Mediterranean oil terminal Fos-Lavera, the world's third-largest port for refined oil products, is also endangering refinery operations and petrol exports to the United States.
Utility Gaz de France and striking workers failed to thrash out a compromise on Thursday.
Talks started again at 1400 GMT on Friday, and if they fail to reach a deal, some refineries, which have already reduced operations, say they will shut completely.
"The European refining complex looks to be on the verge of moving into extreme tightness - at least in the near term - if talks today between French dock workers in Marseille and GDF do not lead to a resolution," Citigroup analysts said.
"We note that a move to full shutdown of refineries is more material than a reduced level of runs, because of the time and risks associate with the restart."
The dispute started on March 14 when GDF rejected a union demand that only port staff should hook up liquefied natural gas cargoes at a GDF terminal due to start up at the end of 2007.
The strike could close nearly half of French refineries by next Wednesday and halt fuel supplies to millions of motorists in southeast France by the end of next week, France's petroleum industry body UFIP said. Their full closure would slash seven per cent of European refinery capacity.
- REUTERS