BLBG:Oil Rises for First Time in Four Days Before Meeting of European Leaders
Oil rose in New York for the first time in four days as Venezuela said OPEC wouldn’t intervene to offset sanctions against Iran and European leaders were scheduled to discuss strategies for resolving their debt crisis.
Futures rose as much as 0.9 percent as Germany’s chancellor prepared to meet the International Monetary Fund’s managing director today in Berlin. The Organization of Petroleum Exporting Countries can’t get involved in a dispute between the U.S. and Iran over sanctions, Venezuela’s oil minister Rafael Ramirez told reporters yesterday in Caracas.
“The Iranian situation is really for speculators and traders to have a bit of fun,” said Gavin Wendt, founder and senior resource analyst at Mine Life Pty in Sydney. “When the situation gets resolved, prices will fall by about $5 to $6.”
Crude for February delivery rose as much as 94 cents to $102.25 a barrel in electronic trading on the New York Mercantile Exchange and was at $102.12 at 2:38 p.m. Singapore time. The contract yesterday slipped 0.3 percent to $101.31, the lowest close since Dec. 30. Prices rose 8.2 percent in 2011, the third annual increase.
Brent oil for February settlement was at $113.21 a barrel, up 0.7 percent, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was little changed at $11.15.
Strait of Hormuz
Petroleum prices are up 4 percent in New York this year amid Iranian threats to block the Strait of Hormuz in response to U.S. and European sanctions over its nuclear program. The waterway carries 17 million barrels of oil a day, according to the U.S. Energy Department, almost 20 percent of global consumption.
Iran has begun enriching uranium at a heavily fortified underground site, the International Atomic Energy Agency said yesterday. The European Union is weighing whether to move up its Jan. 30 meeting of foreign ministers by a week to consider an embargo on imports of Iranian oil, an EU diplomat said.
“The supply side shock potential is keeping the oil price where it is,” said David Lennox, a resource analyst at Fat Prophets in Sydney who forecasts New York crude will average $110 this year. “The situation in Europe is impacting on economic growth, but we think that story is so well factored into the market now.”
Iran is unlikely to block the strait because it would suffer the most, according to Dennis Ross, who served two years on the National Security Council as Obama’s special assistant on Iran. The U.S. hasn’t seen any efforts to close the route to shipping, Pentagon spokesman George Little said yesterday.
“Any Iranian action in defense of their sovereignty is Iran’s issue,” Ramirez told reporters in Caracas yesterday, where Iranian President Mahmoud Ahmadinejad met his Venezuelan counterpart, Hugo Chavez. “OPEC can’t get involved in this issue.”
Nigerian Protests
A general strike in Nigeria will enter a second day, threatening shipments by Africa’s biggest oil producer and adding to possible supply shocks. The strike so far hasn’t affected the oil exports of Royal Dutch Shell Plc’s venture, which has the biggest operations in the country, Tony Okonedo, a company spokesman, said yesterday by phone from Lagos. Protesters are opposed to the government’s decision to end fuel subsidies.
The African nation produced an average 2.2 million barrels of crude a day in December, according to data compiled by Bloomberg, and is the fifth-largest provider of oil imports to the U.S. At least 90 percent is pumped by Shell, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA in joint ventures with state-owned Nigerian National Petroleum Corp.
U.S. Supplies
U.S. crude supplies probably rose 1 million barrels last week, according to the median of nine analyst estimates in a Bloomberg News survey before an Energy Department report tomorrow. An increase would match the longest run of stockpile builds since the three weeks ended May 6.
Gasoline inventories may have climbed 2 million barrels last week to 222.2 million, the highest level in almost 10 months, the survey showed. Distillate supplies, a category that includes heating oil and diesel, probably gained 2 million barrels, according to the survey.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
