by Perrine Faye
LONDON, Aug 24 (AFP) - Oil prices fell Tuesday for the third trading day in a row as supply fears receded after Iraq stepped up oil exports through its southern pipelines and Russia vowed to boost supplies.
The price of benchmark Brent North Sea crude oil for delivery in October dropped 29 cents a barrel to 42.74 dollars in late morning deals in London.
New York`s main contract, light sweet crude for October delivery, fell 21 cents to 45.84 dollars in pre-opening electronic deals.
Prices have fallen markedly since the September contract reached an all-time high 49.40 dollars in New York on Friday before expiring.
"Venezuela has moved away as an issue. Iraq`s production is rebuilding again despite problems continuing in Najaf," noted Commerzbank analyst Jon Rigby.
"We are in a relatively quiet period. That`s the reason why the speculative wave that we saw last week has dried to death and prices are drifting off," he added.
Officials at the South Oil Company in Iraq said Monday oil exports from southern Iraq were moving at 83,000 barrels an hour, about the normal rate, through two pipelines in the south.
Exports had dropped to less than half that rate over the previous two weeks after Shiite Muslim militia loyal to Moqtada Sadr threatened to blow up pipelines feeding two southern terminals.
And Russian President Vladimir Putin told US President George W. Bush in a telephone call that Russian oil companies would boost exports, a White House spokesman said Monday.
Putin`s assurance seemed contradictory in the face of Russian oil titan Yukos`s announcement that it was cutting its 2004 output forecast because the authorities had blocked its access to bank accounts.
Fears of disruptions to supplies from Venezuela have meanwhile faded in the wake of President Hugo Chavez`s recent victory in a referendum on his rule.
Analysts said that speculators now appeared less eager to test the 50-dollar mark after one failed attempt on Friday.
"There was an attempt to get the oil above 50 dollars but that was more speculative than fundamentally driven," said Rigby.
"I think it was probably unrealistically high. After such a strong rally, you would expect prices to come off a bit, but it is difficult to say whether it is permanent or not," he added.
The pick-up in the flow of Iraqi oil was however marred somewhat by ongoing fighting in Najaf.
Dozens of Iraqi national guardsmen joined a fierce US-led assault Tuesday against Shiite militia loyal to radical cleric Moqtada Sadr around the revered Imam Ali shrine, one of the holiest Shiite Muslim mosques in the world.
Amid such instability, analysts said the outlook for Iraqi supplies remained uncertain.
"The restart of Iraq`s oil operations could provide significant extra supply of oil," Barclays Capital`s commodities team said in a research note.
"However, we remain concerned about this supply being maintained, particularly in the north where supply has been intermittent since the war ended."