NEW YORK, Aug 30 (AFP) - Crude oil futures fell Monday to their lowest levels since late July as a ceasefire ordered by a radical cleric in Iraq offered hopes of more stable conditions there.
The October contract price for light sweet crude fell 90 cents to 42.28 dollars per barrel on the New York Mercantile Exchange in late-day deals after dropping briefly below 42 dollars.
There was no quotation for Brent crude oil in London, where markets were closed for the summer bank holiday.
News that radical Shiite leader Moqtada Sadr ordered a nationwide ceasefire and announced that his militant movement would join the political arena overshadowed the latest pipeline attacks in Iraq.
Analysts said crude has been trending lower since peaking above 49 dollars a barrel on August 20 as security concerns diminish.
"It's a continuation of last week's movement," said Fimat USA analyst Mike Fitzpatrick.
"Even though some pipelines in Iraq were sabotaged over the weekend, it was overshadowed by the appeal by Sadr to disarm. There's the feeling security will definitely improve down the road."
The firebrand cleric has spearheaded the largest rebellion against US troops and Iraqi government forces since the fall of Saddam Hussein last year, and his supporters had targeted oil facilities in southern Iraq.
Despite attacks on pipelines in southern Iraq on Sunday and Monday, analysts said they see exports gradually increasing.
Jason Schenker at Wachovia Securities said that despite the pipeline attacks "it doesn't seem to be causing any supply disruption."
An official from the state-run South Oil Company said exports from southern Iraq bounced back to 1.8 million barrels per day Monday despite following several attacks on pipelines.
They had slumped to 800,000 bpd on Saturday following a string of sabotage attacks on southern pipelines before quickly surging back to around 1.5 million bpd.
The average export rate in recent months has oscillated between 1.8 and 1.9 million bpd but attacks have repeatedly reduced or halted production.
Schenker also pointed out that a drop in demand for gasoline has eased some of the tension on the oil market, helping bring crude prices down.