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Oil Rises for Second Day on German Industrial Output, Falling Iran Exports

08 Mar 2012

Oil rose for a second day asGermany’s industrial output increased more than forecast in January and on signs that sanctions on Iran are succeeding in cutting the nation’s crude exports.

Prices gained as much as 0.9 percent as the Economy Ministry in Berlin said production climbed 1.6 percent from December, higher than the 1.1 percent forecast by economists in a Bloomberg survey. Oil shipments from Iran have dropped by 300,000 to 400,000 barrels a day, according to Barclays Capital.

“Any positive economic news at this stage is going to be supportive for oil,” said Peter Beutel, president of trading advisory company in New Canaan, Connecticut.“Iran is making it very difficult for the bears to operate here.”

Oil for April delivery gained 62 cents, or 0.6 percent, to $106.78 a barrel at 11:18 a.m. on the New York Mercantile Exchange. Prices have risen 8 percent this year.

Brent oil for April settlement advanced $1.61, or 1.3 percent, to $125.73 on the London-based ICE Futures Europe exchange.

The European benchmark contract’s premium to New York-traded West Texas Intermediate widened to as much as $19.29, the most since Feb. 7, after the Energy Department said yesterday that U.S. gasoline demand weakened and crude stockpiles at Cushing, Oklahoma, climbed to the highest level since July.

The gain in Germany’s industrial production followed a 2.6 percent decline in December, the steepest drop in almost three years, Economy Ministry data showed.

Equities Rise

U.S. stocks rose and the euro strengthened against the dollar as more investors indicated they will participate inGreece’s debt swap. The Standard & Poor’s 500 (SPX) Index gained as much as 0.8 percent and the euro rose as much as 1 percent. A stronger euro and weaker dollar boost oil’s appeal as an investment alternative.

“Oil turned up with the S&P,” said Phillip Streible, a Chicago-based commodities broker at RJO Futures. “It seems like Greece is starting to make some kind of progress, and with that there is some optimism in the market. Improved economic data globally is helping support oil prices. Iran is definitely a concern and it creates a floor in the market.”

Shipments from Iran have dropped because sanctions are preventing the Islamic Republic from selling oil, Amrita Sen, an analyst at Barclays Capital in London, said yesterday by e-mail.

Half of the tankers booked to load at the country’s largest terminal last month didn’t complete their voyages, according to brokers, company officials and ship-tracking data.

“The consensus is that the EU embargo and U.S. sanctions are having a higher-than-expected impact,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.

Iranian Output

Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped 3.45 million barrels a day last month, the lowest level since September 2002, according to data compiled by Bloomberg. Oil sales earned Iran $73 billion in 2010, accounting for about 50 percent of government revenue and 80 percent of exports, the U.S. Energy Department estimates.

Saudi Arabia is the biggest OPEC producer, with output of 9.69 million barrels a day last month.

Oil fell as much as 0.3 percent earlier after the Labor Department reported the number of Americans filing claims forjobless benefits rose to 362,000 last week. Economists forecast 352,000 claims, according to the median estimate in a Bloomberg News survey.

“The market lost some momentum after the weak the jobless claims number,” said Phil Flynn, an analyst at PFGBest inChicago. “You have a lot of mixed signals in the market.”

The Energy Department reported yesterday that gasoline supplied by refiners, a proxy for demand, fell 1.2 percent to 8.26 million barrels a day in the week ended March 2. Oil inventories at Cushing rose 7 percent to 36.2 million barrels, the highest level since July 22.