Oil prices rose in choppy trading on Tuesday as efforts to strengthen sanctions on Iran and unrest in the region hiked the geopolitical fear premium and offset worries about global economic growth. "It's Iran sanctions, Egypt and Syria and even Libya today, putting the fear premium into prices, especially ahead of the (US Thanksgiving) holiday," said Dominick Chirichella, senior partner, Energy Management Institute in New York.
The United States, Britain and Canada on Monday announced new sanctions on Iran's energy and financial sectors to put more pressure on Tehran to abandon what the UN's International Atomic Energy Agency said were attempts to use its nuclear program develop weapons. The euro rallied against the dollar and helped boost dollar-denominated oil after the International Monetary Fund beefed up its lending instruments and introduced a new six-month liquidity line designed to help to countries at risk from the eurozone debt crisis.
ICE Brent January crude rose $2 to $108.88 a barrel by 2:02 p.m. EST (1802 GMT), having reached $109.45. Brent's $105.65 low on Monday was just above front-month Brent's 300-day moving average of $105.61, providing a technical boost, traders said. US January crude rose $1.10 to $98.02 a barrel, having swung from $96.55 to $98.70. Traders noted technical support accrued after a brief dip on Monday just below its 200-day moving average.
Brent's premium to its US counterpart neared $11 a barrel intraday. Crude trading volumes remained tepid as the US Thanksgiving holiday on Thursday approached. Brent volumes were 26 percent below the 30-day average and US crude volumes 34 percent under the 30-day average in afternoon trading in New York.
Iran on Tuesday dismissed the new wave of sanctions, saying the West's attempts to isolate its economy would unite Iranians behind the government's nuclear program and that the sanctions would not stop petrochemical exports to the European Union. Turkey called on Syrian President Bashar al-Assad to step down, tightening regional pressure on Damascus after Arab states threatened sanctions over Syria's crackdown on unrest.
Egypt's ruling generals offered to transfer power to a civilian president by July in a dramatic attempt to placate protesters. A shootout involving one of Libya's heavily armed militias broke out at a Tripoli gated compound used by foreign workers late on Monday, witnesses said, highlighting security risks as Libya works to restart oil production shut by the civil war.
Oil traders anticipated weekly snapshots of US oil inventories, starting with industry group American Petroleum Institute's data at 4:30 p.m. EST (2130 GMT) on Tuesday US crude oil stocks likely edged up last week, according to a Reuters survey of analysts. Gasoline stockpiles were expected to be up 1.1 million barrels, while distillate stocks were expected to have fallen 1.3 million barrels. Oil and equities prices felt pressure early on Tuesday from a weaker reading on US third-quarter economic growth.
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