Oil drops below $69

Oil prices remained less than $69 a barrel on Monday after falling to a 10-week low in the previous session. Expectations that any sanctions against oil producer Iran were not on and would not necessarily disrupt export flows, pulled the oil prices lower.

U.S. light sweet crude started going down on Friday after the United Nations failed to impose sanctions on Iran for refusing to stop its nuclear enrichment program. It was down $1.17 to $68.02 a barrel yesterday.

London Brent crude fell $1.44 a barrel to settle at $67.71. Its lowest session settlement was $67.59. Nymex floor trading was closed Monday for the Labor Day holiday in the U.S. The front-month crude contract on London's ICE Futures exchange rose 6 cents to $69.21 a barrel.

"Bearish news such as the unexpected increase of U.S. gasoline stocks and the downgrading of the first hurricane of the season outweighed the fact that the ultimatum issued to Iran elapsed without a solution," said Vienna's PVM Oil Associates.

After Saudi Arabia, Iran is the second-largest producer in the Organization of Petroleum Exporting Countries. It defied the U.N. Security Council's Thursday target to halt its nuclear program. Traders have been worried that if punished by the U.N., Iran might block oil exports.

U.N. Secretary-General Kofi Annan on Monday stressed the need to avoid a confrontation with Iran. After meeting with the Iranian President Mahmoud Ahmadinejad Annan, said that Iran's leader wants negotiations on the country's nuclear program.

Last year, hurricanes Katrina and Rita showed how vulnerable oil and natural platforms and pipelines are to powerful storms. They cut the region's fuel production, tightening supplies and sending prices higher.

Hurricane forecaster William Gray's team on Friday reduced its expectations for the 2006 Atlantic storm season for the second time. The outlook for this year's Atlantic storm season has been downgraded to five hurricanes, four less than forecast in May.

Gasoline futures dropped 0.14 cent to $1.7330 a gallon while natural gas prices rose 15.3 cents to $6.03 per 1,000 cubic feet.