Oil Trades Near Two-Day High as Tension With Iran Counters Economy Outlook

Author: Spencer Ogden
Date posted06/Mar/2012
Author: Spencer Ogden

Crude traded near the highest price in two days in New York as the risk that Iran will disrupt oil supplies countered doubts that an economic rebound is intact.

Futures were little changed after rising as much as 0.6 percent. Israel reserves the right to defend itself and keep Iran from acquiring a nuclear weapon, Israel’s Prime MinisterBenjamin Netanyahu said today in Washington. The world economy will grow this year at a pace trailing its longer-term trend, according to the Reserve Bank of Australia. South Korea’s finance ministry said higher oil prices are making the nation’s economic outlook increasingly uncertain.

“The lower side is supported by the Iran situation, but still people don’t have confidence to buy aggressively,” saidKen Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo.

Oil for April delivery was at $106.74 a barrel in electronic trading on the New York Mercantile Exchange, up 2 cents, at 4 p.m. Singapore time. The contract climbed 2 cents yesterday to $106.72, the highest settlement since March 1. Prices fell last week for the first time in four weeks, reducing their gain this year to 8.2 percent.

Brent oil for April settlement on the London-based ICE Futures Europe exchange was at $123.72 a barrel, down 8 cents. The European benchmark contract was at a premium of $17 to New York-traded West Texas Intermediate grade, compared with a record $27.88 on Oct. 14.

Slowing Momentum

Oil is pared earlier gains in New York as a measure of technical momentum declined. On the daily chart, the moving average convergence-divergence oscillator is poised to drop below its signal line for the first time in about a month. That would indicate a bearish crossover, according to data compiled by Bloomberg. Investors tend to sell contracts when the oscillator is decreasing.

U.S. crude stockpiles rose 1.5 million barrels last week, according to the median estimate of seven analysts surveyed by Bloomberg News before an Energy Department report tomorrow. Gasoline stockpiles fell 2 million barrels and distillate-fuel supplies, a category that includes heating oil and diesel, dropped 1.8 million barrels, the survey showed.

The industry-funded American Petroleum Institute will release its own stockpile data in Washington today.

Economic sanctions on Iran haven’t led the country to curtail its nuclear program, and Israel must be able to defend itself against a threat to its existence, Netanyahu said in a speech to the American Israel Public Affairs Committee yesterday.