MW: Oil edges up with Mideast tensions on the rise
By Myra P. Saefong and Michael Kitchen, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures rose Thursday, finding support as Iran reportedly rejected direct talks with the United States on its nuclear standoff and as political tension intensified in Tunisia after the assassination of an opposition leader.
Traders also cheered comments by European Central Bank President Mario Draghi, who said that the euro-zone economy should start to recover later this year, but some signs of weaker demand prospects limited gains for oil.
Crude-oil futures for March delivery CLH3 -0.62% added 28 cents, or 0.3%, to $96.90 a barrel on the New York Mercantile Exchange after ending 2 cents lower Wednesday. See: Oil ends flat as market weighs supply levels.
London-traded Brent crude for March UK:LCOH3 +0.14% added 74 cents, or 0.6%, to trade at $117.47 a barrel on ICE Futures.
Oil prices, especially those for Brent, gained as Ayatollah Ali Khamenei, Iran’s supreme leader, on Thursday reportedly rejected proposals for direct talks with the U.S. over Iran’s nuclear progress. Hopes for talks had pressured prices earlier this week.
The U.S. took a number of actions Wednesday to tighten sanctions on Iran’s access to its oil revenues, including restricting its ability to use oil revenue held in foreign financial institutions.
“Geopolitical tension dominates the global crude complex, as various hot spots of unrest rise up,” said Matt Smith, commodity analyst at Schneider Electric in Louisville, Ky., adding that there are violent protests in Tunisia after the assassination of an opposition leader.
Chokri Belaid was shot outside his home Wednesday and thousands of Tunisians took to the streets in protest after the attack, according to The Wall Street Journal. See WSJ story: Tunisia assassination upends government
“Events here are being watched particularly closely, as this is where the Arab Spring started in late 2010,” said Smith.
Meanwhile, in a news conference, the ECB’s Draghi said the euro-zone economy should begin to recover later this year due in part to the bank’s “accommodative” monetary policy. The central bank left its key lending rate unchanged at a record low of 0.75% as expected. See: Draghi says euro reflects confidence.
The euro EURUSD -0.98% was trading sharply lower after Draghi’s comments, contributing to a rise in the ICE dollar index DXY +0.53% . The stronger dollar helped keep a cap on gains in dollar-denominated oil Thursday.
Looking ahead, oil investors were also awaiting Chinese trade data, due out Friday, which include energy-import figures that signal China’s demand trends.
Elsewhere in the energy complex, March heating oil traded HOH3 +0.37% at $3.205 a gallon, up 2 cents, or 0.6%, but March gasoline RBH3 -0.69% fell less than half a cent to $3.04 a gallon.
March natural gas NGH13 -1.40% was nearly flat at $3.415 per million British thermal units.
The EIA will report its weekly data on natural-gas supplies at 10:30 a.m. Eastern. Analysts polled by Platts expect to see a decline of between 122 billion and 126 billion cubic feet in supplies
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
