Brent crude oil firmed near nine-month highs on Wednesday as supportive Iran-related tensions and supply worries outmatched pressure from weak economic data in Europe and China, which cast doubt on future global growth. US crude futures turned positive in late trade, rising as high as $106.72, a fresh nine-month high.
In London, ICE Brent crude for April delivery rose for a third day and was up $1.22 at $122.88 a barrel, by 2:30 pm EST (1930 GMT). The contract was up during most of the US session then accelerated to $123.23, the highest since the $125.02 intraday peak on May 3 last year.
US April crude rose 4 cents to $106.29 for a fifth day of gains. Brent crude's premium against US crude bounced back to around $16.70, after closing at $15.41 on Tuesday. Brent's total trading volume was down 2 percent from its 30-day average, according to Reuters data. US dealings were down almost 36 percent from its 250-day average. Both Brent and US crude were showing signs of being overbought. US crude futures tipped 71 on the 14-day relative strength index and Brent crude neared 78, well over the 70 level that is usually seen as an indication of a commodity poised for a correction lower.
The UN nuclear watchdog ended its latest mission to Iran after talks on Tehran's suspected secret atomic weapons research failed, a setback likely to increase the risk of confrontation with the West. Russia warned Israel not to attack Iran over its nuclear program, saying on Wednesday that military action would have catastrophic consequences. "We've got a tug of war here between Iran tensions and slowing global economic growth," said Mark Waggoner, president of Excel Futures in Bend, Oregon.
As tensions between Iran and the West over Tehran's disputed nuclear program have escalated, Asian and Europe buyers of Iranian crude are cutting purchases as tightening US sanctions make it difficult to deal with Iran. The European Union has imposed a ban on Iranian crude, to take effect on July 1 to allow member nations to look for alternative sources.
The euro zone's service sector shrank unexpectedly this month, reviving fears that the region's economy risks sinking into recession, the Markit Eurozone Services Purchasing Managers' Index showed. China's manufacturing sector contracted in February for a fourth straight month as new export orders dropped sharply due to the euro zone debt crisis, dampening the economic growth outlook in the world's second-largest oil user.
Oil investors will focus next on US inventory reports, the first of which will come from the industry group American Petroleum Institute at 4:30 pm EST (2130 GMT). A Reuters poll ahead of the report forecast that US crude stockpiles fell 400,000 barrels last week. The poll also showed forecasts for a 1.1-million barrel decline in distillate stocks and a 300,000-barrel rise in gasoline supplies. The US Energy Information Administration will release its report on Thursday at 11 am EST (1600 GMT). Both inventory reports are delayed a day due to Monday's President Day holiday.
Comments
Comments are closed.