LONDON (AFX) - Oil prices were largely unchanged, continuing Friday's range-bound trade as traders weigh supply risks in key producing countries against a reported increase in Iraqi production and worries over the health of the global economy.
At 10.49 am, August-dated Brent contracts were up 1 cents at 69.94 usd, after climbing only 2 cents on Friday to close at 70.87 usd. Meanwhile August-dated US light crude futures were down 5 cents at 70.85 usd.
Earlier, oil traded lower after Iraq, which sits on one of the world's largest proven oil reserves, said yesterday its oil production is now more than 2.5 mln bpd -- a record since the fall of Saddam Hussein.
Oil Minister Hussein Shahristani said Iraq hoped to be producing 4.3 mln barrels by 2010 and to be challenging Saudi Arabia as the world's largest producer by 2015.
Further, analysts said the market was seemingly less concerned about key producer Iran's nuclear standoff with the West as it brushes aside renewed threats from Tehran to disrupt world oil supplies.
Oil minister Kazem Vaziri Hamaneh said Sunday that if Iran's "interests are attacked" amid the dispute over the country's nuclear programme, it "will use oil as a weapon".
Investec analyst Bruce Evers said the market was not paying much attention to the comments as "the last time they said something like that prices went through the roof".
Oil prices have been trading in a narrow band between 68-73 usd over the past seven weeks, held in check by concerns about a global economic slowdown on the one hand, and supply risks in key producing countries on the other hand.
Nas Nijjar, a trader at CMC markets, said the market is currently looking to the Federal Reserve's interest rate meeting on Thursday, at which a further rate hike is widely expected.
He said continued tightening of monetary policy in the US and China -- the world's largest oil consumers -- have taken the upward momentum out of the commodity markets over the past few weeks.
Oil, however, has been the least affected by the moves by the world's central bankers to try to control inflation by raising rates as it is supported by geopolitical concerns.
"We're going to stay range bound unless geopolitical concerns resurface -- commodities are taking a breather at present but longer term we still think crude will go higher," said Nijjar. maytaal.angel@afxnews.com ma/cml
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