BLBG:Oil Advances to One-Month High After Report Iran Cut Exports to Europe
Oil rose to a one-month high following reports that Iran halted shipments to Europe and that U.S. inventories declined for the first time in four weeks.
Futures climbed 1.1 percent after Iran stopped crude exports to France and the Netherlands and threatened to end shipments to four other European countries, state-run Mehr news agency reported, citing an unidentified official at the National Iranian Oil Co. U.S. oil supplies unexpectedly decreased in the week ended Feb. 10, an Energy Department report showed.
“The numbers today are bullish, but the primary reason we are higher is the Iran fear premium,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York.
Oil for March delivery rose $1.06 to $101.80 a barrel on the New York Mercantile Exchange, the highest settlement since Jan. 10. Prices have increased 21 percent in the past year.
Brent oil for April settlement increased $1.58, or 1.3 percent, to end the session at $118.93 a barrel on the London- based ICE Futures Europe exchange.
The European Union agreed in January to halt oil purchases from Iran as of July 1. The foreign ministry in Tehran summoned the six nations’ ambassadors to protest EU sanctions on the country’s nuclear program, Fars reported.
Iran loaded locally built fuel plates into its nuclear research reactor in Tehran, Press TV reported, showing images of President Mahmoud Ahmadinejad inside the facility. Jay Carney, the White House press secretary, said the U.S. expects to learn more about the matter from International Atomic Energy Agency inspectors working in Iran.
$10 a Barrel
“Crude is holding on because the tensions seem to be more pronounced in Iran,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
The tension between the Persian Gulf producer and Western nations has added $10 a barrel to the price of crude, according to analysts at UBS AG (UBSN), Switzerland’s biggest bank.
“There’s an inflationary impact from the tension in the Middle East,” said David McAlvany, chief executive officer of McAlvany Financial Group in Durango, Colorado. “If oil were to advance above $105, these nascent economic recovery stories would be squashed.”
Oil has climbed 3 percent this year amid signs that economic growth in the U.S., the world’s leading user of crude, is accelerating. Production at U.S. factories rose 0.7 percent in January after a revised 1.5 percent increase the prior month that was the largest in five years, figures from the Federal Reserve showed today in Washington.
Inventories Slip
U.S. inventories of crude oil declined 171,000 barrels to 339.1 million last week, the Energy Department report showed. Supplies were forecast to increase 1.5 million barrels, according to the median of 13 analyst responses in a Bloomberg News survey.
Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 2.87 million barrels to 143.7 million. It was the biggest decrease since Nov. 4. Supplies were forecast to fall 1.1 million barrels.
Total fuel demand increased 5.9 percent to 18.7 million barrels a day last week, the report showed. Gasoline consumption increased 1.6 percent to 8.17 million barrels a day, the highest level since the first week of the year. Use of the motor fuel was down 7.3 percent from a year earlier.
Chinese Pledge
Crude also rose when Central Bank Governor Zhou Xiaochuan said China will help resolve Europe’s debt crisis. Zhou’s pledge to invest in Europe’s bailout funds and sustain its holdings of euro assets echoed comments by Premier Wen Jiabao yesterday and sparked optimism Europe will overcome a debt crisis that threatens renewed market turmoil.
“The Chinese moves to aid Europe will only add to the liquidity” that is bolstering crude, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
Luxembourg Prime Minister Jean-Claude Juncker said he’s confident euro-area finance minister will make a decision on a bailout for Greece at their next meeting on Feb. 20. Juncker, chairman of the group, issued a statement after the ministers held a conference call today on the Greek package.
Oil volume in electronic trading on the Nymex was 708,507 contracts as of 4:15 p.m. in New York. Volume totaled 876,138 yesterday, the most since Feb. 8. Open interest was 1.49 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
