by Perrine Faye
LONDON, Aug 26 (AFP) - World oil prices fell strongly Thursday for the second day running as worries over supply disruptions eased with traders claiming overnight pipeline attacks in major producer Iraq were unlikely to affect the country`s crude exports.
A ceasefire in Iraq`s holy city of Najaf to mark the arrival there of Shiite spiritual leader Ali al-Sistani helped also to cool prices, as did comments by the heads of OPEC and the International Energy Agency aimed at easing market fears, traders added.
The price of benchmark Brent North Sea crude oil for delivery in October fell 41 cents to 40.27 dollars per barrel in late afternoon deals, having plunged to 39.67 dollars earlier in the day, the lowest level for almost one month.
The contract had meanwhile shed 1.64 dollars by the close of trading Wednesday.
New York`s main contract, light sweet crude for October delivery, lost 37 cents to 43.10 dollars per barrel in early trading, having fallen to as low as 42.50 dollars.
The contract had plunged 1.74 dollars on Wednesday.
Dictating price movement Thursday was mainly events in Iraq, where eight pipelines feeding two southern oilfields were sabotaged in an overnight explosion, officials said.
"Eight pipelines were hit, but so far there is little detail to say if this is affecting loadings at the pumping station," GNI-Man Financial trader Kevin Blemkin said.
But a source at the South Oil Company said exports would be affected, without elaborating.
"At 9:00 pm (1700 GMT), a device exploded under a bridge, which collapsed. Eight parallel pipelines, feeding the Zubeir 1 and Zubeir 2 oilfields were damaged," the source said on condition of anonymity.
"The fire still had not been put out Thursday morning. This sabotage will affect exports," he added.
Threats against oil infrastructure amid fighting between US troops and Shiite Muslim fighters in the holy city of Najaf had seen world oil prices reach record highs before southern Iraqi exports resumed to normal levels last weekend.
In Najaf Thursday, a 24-hour ceasefire began upon spiritual leader Sistani`s arrival there. However, his arrival was marked by death in Najaf`s twin city of Kufa, where 74 people were killed and 376 wounded in a mortar attack on the main mosque and shooting at a march which was blamed on Iraq`s national guard, the health ministry said.
Prices began plunging Wednesday as a modest improvement in the supply outlook, helped in part by a resumption to Iraqi exports, encouraged speculators to bank their profits, analysts said.
The New York contract remains far below last Friday`s all-time high of 49.40 dollars per barrel.
With prices heading downwards, "OPEC and the International Energy Agency are both trying to talk the market down", GNI-Man Financial trader Blemkin said Thursday.
OPEC president Purnomo Yusgiantoro, speaking to reporters Thursday, said the cartel hoped oil prices could come down to 30 dollars per barrel.
But he noted that the Organisation of Petroleum Exporting Countries must take stock of its spare oil capacity before any decision on a possible increase in production quotas could be made at the cartel`s meeting in Vienna next month.
"We will take stock of the spare capacity we have and we will then discuss whether we can increase our production quota," said Yusgiantoro, who is also Indonesia`s energy minister.
He added: "Oil prices have come down and we hope that it can reach the 30 (dollar) figure, because that is a quite fair figure."
The head of the International Energy Agency meanwhile said that the oil production situation was under control and that prices should ease.
"Some oil market worries have been revealed to be overdone," especially in regard to the political situation in Venezuela and the troubles of Russian oil giant Yukos, Claude Mandil told French business newspaper La Tribune.
"Everything is not sorted out, but in regard to oil production, the situation is more or less under control. All of that should bring prices lower," he said.