BLBG:Oil Rises From Three-Day Low on Greek Austerity Measures, Iran Sanctions
Oil advanced from a three-day low after Greece’s parliament approved austerity measures to secure an international bailout, easing concern that Europe’s debt crisis will worsen and curb commodity demand.
Futures rose as much as 1 percent in New York after 199 lawmakers supported the bill in a roll-call vote shown live on state-run Vouli TV, compared with 74 who were opposed. The measures were needed to secure a 130 billion-euro ($172 billion) second aid package. Sanctions on Iran tightened after companies controlling more than 100 supertankers said they would stop loading cargoes from the nation.
“It’s a confidence builder in terms of Greece’s willingness to implement reform,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has made the adjustment it needed to make from being excessively pessimistic a few months ago and has now based itself on an assumption of moderate international growth.”
Oil for March delivery climbed as much as 97 cents to $99.64 a barrel on the New York Mercantile Exchange. It was at $99.63 at 3:02 p.m. Sydney time. The contract declined $1.17, or 1.2 percent, to $98.67 on Feb. 10, the lowest close since Feb. 7. Prices are up 17 percent from a year ago.
Brent oil for March settlement increased 98 cents, or 0.8 percent, to $118.29 a barrel on the ICE Futures Europe exchange. The more-actively traded April contract gained 99 cents to $117.74. The European benchmark contract’s premium to New York- traded West Texas Intermediate was at $18.66, compared with $18.64 on Feb. 10. It reached a record of $27.88 on Oct. 14.
Iran Sanctions
Oil also rose amid signs that sanctions on Iran are disrupting the Persian Gulf nation’s crude shipments. Supertanker owners including Overseas Shipholding Group and Frontline Ltd. said they would stop loading cargoes from the Organization of Petroleum Exporting Countries’ second-largest producer.
The European Union’s Jan. 23 agreement to embargo Iran’s oil because of the country’s nuclear program extended the ban to ship insurance. With about 95 percent of the tanker fleet insured under rules governed by European law, there are fewer vessels able to load in Iran.
Overseas Shipholding, based in New York, said Feb. 10 that the pool of 45 supertankers from seven owners in which its carriers trade will no longer go to Iran. Nova Tankers A/S and Frontline, with a combined 93 vessels, said Feb. 9 and 11 they won’t ship Iranian crude.
Nuclear Claims
“Latest reports on Iran suggest that financial sanctions are already hitting oil production, with falls in output and exports likely to accelerate,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. “The nation is looking to showcase its nuclear capabilities to the rest of the world in the coming days, which we think could provide additional support to oil prices in the region as tensions flare.”
Iran’s average crude output fell 30,000 barrels a day in January from December, according to estimates compiled by Bloomberg. President Mahmoud Ahmadinejad said on Feb. 11 he will unveil “major nuclear accomplishments” in coming days, the state-run Press TV news channel reported. EU foreign ministers agreed to ban Iranian oil imports starting July, while Iran has threatened to block shipments through the Strait of Hormuz, a transit route for about 20 percent of the world’s globally traded oil.
Austerity Bill
Passage of the austerity bill in Greece puts the spotlight on a meeting of euro-region finance ministers on Feb. 15 that must decide whether to approve the second aid package. Resolution of the negotiations, which started in July, would help contain the threat that speculators will target debt- saddled nations, including Italy and Portugal.
European Union countries account for about 16 percent of the world’s oil demand, according to BP Plc’s Statistical Review of World Energy.
Hedge funds increased bullish oil wagers by 4,440, or 2.2 percent, to 205,709 contracts in the week ended Feb. 7, the Commodity Futures Trading Commission’s Feb. 10 Commitments of Traders report showed.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net
