Oil fell $1 (€0.78) yesterday on hopes that tension over Opec member Iran's nuclear ambition will ease after Tehran made an unprecedented move to contact Washington.
US light crude for June delivery was down $1.04 to $69.15 a barrel in afternoon trade in New York after trading as low as $68.25, while London Brent crude fell $1.05 to $69.90 a barrel.
Word of the letter Iranian president Mahmoud Ahmadinejad had written to US president George Bush helped ease trader concern on the standoff over Tehran's nuclear programme, which helped push US oil prices to $75 last month.
"In this letter, he has given an analysis of the current world situation, of the root of existing problems and of new ways of getting out of the current vulnerable situation in the world," Iranian government spokesman Gholamhossein Elham said.
The letter is the first publicly announced personal communication from an Iranian premier to a US president since ties between the two countries were broken after the 1979 Islamic revolution.
The US has led international action against Iran's nuclear plan, which it says is aimed at building atomic weapons.
Iran says it needs nuclear fuel for civilian use and has reacted defiantly to the possibility of any UN resolution demanding it halt its programme. At the weekend, it reissued a threat to leave the nuclear non-proliferation treaty.
Analysts were cautious over the impact of the letter. "The news from Iran is certainly bearish, at least immediately anyway. But the extent of how bearish it is going to be depends on the content of the letter, which no one knows as yet," said Tetsu Emori, the chief commodities strategist at Mitsu. - (Reuters)
