Bloomberg News

Oil Increases a Sixth Day as Iran Nuclear Work Poses Supply Risk

November 09, 2011

Nov. 9 (Bloomberg) -- Oil rose for a sixth day in New York on speculation that Iran’s nuclear plans threaten Middle East stability and Europe’s debt crisis will be easier to resolve as the Italian prime minister offers to step down.

Futures advanced as much as 0.5 percent, matching the longest streak in a year. The U.S. may pursue additional sanctions against Iran following the release of a United Nations report that concludes the Islamic Republic is working on a nuclear weapon, according to two U.S. officials. Fuel stockpiles fell last week, the industry-funded American Petroleum Institute said yesterday.

“This current supply-shock potential that the markets are looking at with Iran has pushed the price well above our outlook,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who had forecast oil trading from $80 to $90 a barrel. “The situation in Europe will still take some time for the corrective activities to flow through to the real economy.”

Crude for December delivery gained as much as 52 cents to $97.32 a barrel in electronic trading on the New York Mercantile Exchange. It was at $96.86 at 3:45 p.m. Singapore time. Yesterday, the contract climbed $1.28, or 1.3 percent, to $96.80, the highest settlement since July 28. Prices are 6.2 percent higher the past year.

Brent oil for December settlement on the London-based ICE Futures Europe exchange increased as much as 75 cents, or 0.7 percent, to $115.75 a barrel. The European benchmark contract was at a premium of $18.65 to New York crude, from a record settlement of $27.88 on Oct. 14.

Fibonacci Resistance

Oil in New York has technical resistance around $99.60 a barrel, according to data compiled by Bloomberg. That’s the 38.2 percent Fibonacci retracement of the price drop from the 2011 high in May to the low in October, and is close to the upper Bollinger Band on the daily chart. Sell orders tend to be clustered near chart-resistance levels.

U.S. gasoline inventories dropped 1.5 million barrels last week to 207.1 million, the lowest since August 2009, based on the API report. An Energy Department report today may show supplies rose 1 million barrels, according to the median estimate of 13 analysts surveyed by Bloomberg News.

Distillate-fuel stockpiles, including heating oil and diesel, were down 2.9 million barrels, declining for a seventh week, the API said. Supplies decreased 2.2 million barrels, the Bloomberg survey showed.

Crude inventories climbed 148,000 barrels, the API said. A median 500,000-barrel gain is forecast by analysts polled. The U.S. is the world’s biggest oil consumer, using 19.1 million barrels a day in 2010, or 21 percent of global consumption, according to BP Plc’s Statistical Review.

‘Indigenous Design’

The UN’s International Atomic Energy Agency, drawing on evidence collected over eight years, reported yesterday that Iran carried out “work on the development of an indigenous design of a nuclear weapon including the testing of components.”

Iran is the second-largest producer behind Saudi Arabia in the Organization of Petroleum Exporting Countries, a 12-member group that pumps about 40 percent of the world’s crude.

OPEC yesterday raised its estimates for global oil consumption to 2015, citing a faster-than-forecast economic recovery. Demand will increase 5.3 percent to 92.9 million barrels a day in the next four years, led by emerging Asian economies, according to the group’s annual World Oil Outlook. The 2015 prediction is 1.9 million barrels more than last year’s forecast. Europe’s debt crisis and slowing growth in the U.S. pose risks, it said.

Italian Prime Minister Silvio Berlusconi said he’d step down as soon as parliament passed austerity measures pledged to European Union allies, to convince investors the country can curb record borrowing costs.

--With assistance from Yee Kai Pin in Singapore. Editors: Paul Gordon, Mike Anderson.

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


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