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Oil prices retreat as cease-fire holds

NEW YORK -- Oil prices fell yesterday as supply fears abated when the cease-fire in Lebanon appeared to hold and as production restarted at BP's Alaska field.

Light sweet crude for September delivery fell 48 cents to settle at $73.05 a barrel in electronic trading on the New York Mercantile Exchange. September Brent at London's ICE Futures exchange settled at $73.80 a barrel, down 50 cents.

A day earlier, oil prices fell as much as $1.75 a barrel as the cease-fire began and investors responded to news that BP expects to maintain half of its production at a large oil field in Alaska despite a pipeline leak. BP had previously said it would have to shut down the nation's largest oil field after discovering a leak nearly a week ago.

As of Monday, 150,000 barrels of crude and natural gas a day were flowing from the western side of the field. BP spokesman Daren Beaudo said there is no timetable in place, but the company intends to ramp production up to about 200,000 barrels, or half of normal production.

Both gasoline futures and heating oil futures edged up less than a penny yesterday. Gasoline futures settled at $1.9916 a gallon, while heating oil futures rose to $2.0235 a gallon.

In other Nymex trading, natural gas futures dropped 5.2 cents to $6.861 per 1,000 cubic feet.

Prices remain supported by the standoff between the United Nations and Iran over its nuclear program as well as supply disruptions in Nigeria due to civil unrest.

Armed men snatched four foreign oil workers from a nightclub over the weekend amid widespread gun battles, continuing a spate of kidnappings in Nigeria's southern oil hub.

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