OIL PRICE FALLS
In London a barrel of Brent Crude for October delivery was down 99p at $39.65 in late trading.
Traders, who were off for Monday's Bank Holiday when the New York market closed down sharply, yesterday moved to catch up.
Hedge funds were reported to have been particularly active in reducing their long positions on the price of oil.
Rob Laughlin, an oil trader at GNI Man Financial, said: "The key support level was breached and we have rolled over and followed on."
He added: "It does not mean the bubble has burst, but the market is absorbing more bad news.
"It is the end of the driving season in the US next week, but because it hasn't been such a good summer, gasoline prices are down. Gasoline prices were down sharply yesterday and are down again today."
The price fall was also caused by good news from Iraq, which has returned to full capacity after two weeks of terrorist attacks on its pipeline networks.
Iraq said it would export 1.75m barrels from its southern fields yesterday and local shipping agents said the country would begin exporting oil from its northern fields, through the Turkish port of Ceyhan, for the first time in more than a month.
However, Iyad Allawi, the Iraqi interim prime minister, said the repeated attacks on the country's oil infrastructure had cost more than $1billion.
In Russia, President Putin said yesterday that Russian oil companies would "continue to increase the extraction of oil and they will increase their deliveries to the global market".
Mr Putin was speaking after talks with French president Jacques Chirac and German chancellor Gerhard Schroder.
The Russian premier said "all the oil companies without exception", would pump more oil, allaying concerns over the future production of Yukos, which is fighting for its life in the Russian courts. Mr Putin set a figure of 450m tonnes of oil production and 255m tonnes of exports, up from 421m tonnes and 228m tonnes respectively last year.
Chancellor Schroder thanked President Putin for the promise, saying: "Otherwise we would certainly have worries that the world economy could suffer," due to a lack of oil.
Purnomo Yusgiantoro, the president of Opec, said that "non-fundamental factors" were pushing the price of oil up, in a reference to the speculators who have entered the market in recent weeks.
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