BLBG:Oil Trades Near a One-Week High as Iran Tension Counters European Economy
Oil traded near the highest settlement in almost a week as concern that supplies from Iran will be disrupted countered speculation Europe may enter a recession as it struggles to tame its debt crisis.
Oil pared losses of as much as 0.6 percent after Iran’s Fars news agency said a nuclear scientist was killed in a bomb attack in Tehran. U.S. Treasury Secretary Timothy F. Geithner is visiting China and Japan as he seeks support for sanctions against Iran’s nuclear program. The Persian Gulf nation has threatened to shut the Strait of Hormuz if its oil exports are blocked. Germany’s economic growth slowed last year and Spanish factory output shrank the most since 2009, reports today showed.
“Tensions over Iran have contributed a risk premium of about $4 to $5 a barrel,” said Victor Shum, a senior principal at Purvin & Gertz Inc., an industry consultant in Singapore. “Europe’s economic outlook is certainly not robust. That’s taken into account in the oil price.”
Crude for February delivery was at $102.25 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 4:06 p.m. Singapore time. The contract yesterday climbed 0.9 percent to $102.24, the highest close since Jan. 4. Prices are up 3.5 percent this year.
Brent oil for February settlement rose 18 cents to $113.46 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was at $11.21, compared with $11.04 yesterday and a record $27.88 on Oct. 14.
Tehran Attack
Mostafa Ahmadi Roshana, a director at the Natanz uranium enrichment facility in Iran’s Isfahan province and a professor at Tehran’s technical university, was killed in today’s blast, Fars said. A magnetic bomb was placed under his car by a person on a motorcycle, according to the news agency, which said the incident was similar to previous attacks on scientists involved in Iran’s nuclear program.
Geithner is in Beijing for talks with Chinese Premier Wen Jiabao and visits Japan tomorrow as he lobbies for sanctions against Iran’s atomic program. The Asian countries are the largest importers of Iranian oil, with China accounting for 22 percent and Japan buying 14 percent during the first half of last year, according to the U.S. Energy Information Administration.
“China will be less OK with it than Japan,” Matthew Levitt, a former financial intelligence official at the Treasury Department who is now at the Washington Institute for Near East Policy, said about the plan for sanctions.
Europe Embargo Talks
Oil fell earlier after four diplomats said European Union talks on blocking imports of Iranian oil are bogged down. Greece, Italy and Spain are trying to soften a U.K. push for a blanket ban, on concern that a supply shock would add to the economic damage from the European debt crisis, the diplomats said, declining to be identified because no final agreement has been reached. Foreign ministers from the 27 EU member states are scheduled to decide on sanctions on Jan. 23 in Brussels.
An Energy Department report today may show U.S. crude inventories rose 1 million barrels last week, according to the median of 12 analyst estimates in a Bloomberg News survey. The industry-funded American Petroleum Institute said yesterday that inventories gained 397,000 barrels.
Gasoline supplies climbed 1.89 million barrels last week, figures from the API showed. They are forecast to increase 2.25 million barrels in the Energy Department report. Distillate inventories, a category that includes heating oil and diesel, rose 846,000 barrels compared with an estimate for a 2.25 million-barrel gain.
Goldman Sachs
Oil has risen this year because of an improving economic outlook rather than tension with Iran, Goldman Sachs Group Inc. said in a report dated yesterday. The bank sees little evidence of an Iran premium in the oil price and has increasing confidence that Europe’s debt crisis will be contained in the region, according to the note from David Greely, head of energy research at Goldman in New York.
Germany’s economic growth slowed to 3 percent last year from 3.7 percent in 2010, the Federal Statistics Office in Wiesbaden said today. Spain’s industrial output declined 7 percent in November from a year earlier, the most since October 2009, the National Statistics Institute in Madrid said in an e- mailed statement.
To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
