BLBG:Oil Trades Near Nine-Month High on Iran Tension
Oil traded near the highest price in nine months after euro-area finance ministers agreed on a second bailout for Greece, improving prospects for fuel demand.
Futures in New York advanced as much as 2.1 percent from Feb. 17. There was neither floor trading nor a closing price yesterday in the U.S. because of the Presidents’ Day holiday. Brent futures were little changed in London as Europe’s finance ministers awarded 130 billion euros ($173 billion) today in aid to Greece. China’s crude imports from Iran in January fell 5 percent from a year ago and 14 percent from December, the General Administration of Customs said in a statement today.
Crude gained “on the assumption that things will probably work out for a while” in Greece, said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The situation in Iran is building some risk premium into the market.”
Oil futures for March delivery, which expire today, advanced as much as $2.20 to $105.44, the highest intraday price since May 5 on the New York Mercantile Exchange. The contract was at $104.91 at 3 p.m. in Singapore, while the more actively traded April future gained $1.53 to $105.13. Today’s trades will be booked with yesterday’s electronic transactions for settlement. Prices are 22 percent higher than a year ago.
Brent oil for April settlement was at $120.01 a barrel, up 1 cent, on the ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $14.79, narrowing from this year’s widest spread of $19.02 on Feb. 6.
Technical Resistance
Oil in New York started the week above long-term technical resistance at $103.39 a barrel, signaling prices may extend gains, according to data compiled by Bloomberg. On the weekly chart, that price is the 61.8 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year. Buy orders tend to be clustered above chart-resistance levels.
United Nations investigators are starting two days of meetings in Iran, offering Tehran a chance to stem speculation that its nuclear program will spark a military conflict. Oil gain comes after Iran’s oil-ministry news website Shana reported Feb. 19 that the nation will cut supplies to the U.K. and France.
“We imagine this was met by our friends in London with a general shrug,” Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, said in a note today. He estimates that 22 percent of Iranian crude exports are purchased by China, while Japan buys 14 percent. “Until we see one of these buyers affected, Iran will remain mostly bark and little bite.”
‘No Impact’
Iran’s attempt to preempt a European Union import ban will have “no impact on Britain’s energy security or supplies,” U.K. Foreign Secretary William Hague said yesterday in London. The U.K. got 1 percent of its crude from Iran in the first half of 2011 and France got 4 percent, according to the U.S. Energy Administration.
The EU said yesterday that member countries are cutting oil purchases from Iran and have sufficient reserves to deal with disruptions. The EU agreed to stop purchases of Iranian crude starting July 1 in a move to punish the Persian Gulf country’s nuclear program.
Japan’s government has yet to agree with the Obama administration on an exemption to a U.S. law that would punish banks doing business with Iran, Foreign Minister Koichiro Gemba said today in Tokyo. Japan is still negotiating over cutting Iranian oil imports, he said.
Restoring Libya
Libya, holder of the largest oil reserves in Africa, won’t be able to restore oil production to pre-war levels before the end of 2013 at the earliest, Shokri Ghanem, the former chairman of Libya’s National Oil Corp., said in an interview yesterday.
Libyan Oil Minister Abdul-Rahman Ben Yezza said on Dec. 14 that the country’s crude output will return to its pre-conflict level in the third quarter of 2012. The country is restoriing production disrupted by fighting last year that led to the ouster of then-leader Muammar Qaddafi.
“I don’t think they can come back to pre-revolutionary levels, say, by the summer,” Ghanem said in an interview in Doha, Qatar. The country’s new government must first improve security at oil installations, free up sufficient funds for the oil sector and resolve labor disputes among oil workers, he said.
Hedge-funds and other money managers raised bullish bets on Brent crude by 6,818 contracts, or 7.5 percent, in the week ended Feb. 14, data yesterday from the ICE Futures Europe exchange showed.
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
