BLBG:Oil Rises a Second Day on Signs U.S. Crude Supplies Shrank, Iran Outlook
Oil rose for a second day in New York on forecasts that U.S. crude stockpiles declined for a second week and speculation that further sanctions against Iran will curb supply from OPEC’s second-largest producer.
Futures advanced as much as 0.8 percent, extending yesterday’s 0.4 percent gain. U.S. crude inventories fell by 2 million barrels last week, according to a Bloomberg News survey before tomorrow’s Energy Department report. Gulf Cooperation Council leaders are in Saudi Arabia for a meeting that may address responses to Iran’s nuclear program.
“Markets are keeping an eye on what’s brewing in Iran,” said David Lennox, a resource analyst at Fat Prophets in Sydney who had forecast oil would trade from $80 to $90 a barrel before tension increased in the Gulf. “While potential sanctions are discussed, it’ll always act as a nervous price-rally point.”
Crude for January delivery climbed as much as 70 cents to $94.58 a barrel in electronic trading on the New York Mercantile Exchange. The contract, which expires today, was at $94.25 at 12:30 p.m. Singapore time. The more actively traded February future gained 40 cents to $94.45. Prices are 3.2 percent higher this year after rising 15 percent in 2010.
Brent oil for February settlement on the London-based ICE Futures Europe exchange rose as much as 66 cents, or 0.6 percent, to $104.30 a barrel. The European benchmark contract was at a premium of $9.68 to New York-traded West Texas Intermediate grade for the same month. The front-month spread was a record $27.88 on Oct. 14.
$40 ‘Surge’
Oil may surge by $40 a barrel if sanctions halt supplies from Iran, Francisco Blanch, Bank of America Corp.’s head of commodities research in New York, said in a report. The Persian Gulf nation is the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Iran may face new sanctions that target its crude trade as the European Union and other importers seek to intensify pressure over its nuclear program. The country pumped about 5 percent of the world’s oil last year, based on BP Plc’s annual Statistical Review of World Energy. It borders the Strait of Hormuz, the sea channel through which about 15.5 million barrels a day, or a sixth of global shipments, is transported, according to the U.S. Energy Information Administration.
U.S. Inventories
U.S. crude inventories probably fell last week as refineries in states along the Gulf of Mexico limit stockpiles before year end to reduce tax bills, according to the Bloomberg News survey of analysts. All seven respondents forecast a drop in supplies. Gasoline stockpiles are expected to have increased by a median 1 million barrels.
The industry-funded American Petroleum Institute in Washington will release its supply data today.
Oil in New York has technical resistance along the 50-day moving average, at $94.84 a barrel today, Bloomberg data show. Futures settled below that indicator in the past three days. Sell orders tend to be clustered near chart-resistance levels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
