Dec. 7 (Bloomberg) -- Oil rose for a fourth day in New York on concern global supplies of crude will shrink after the European Union signaled it may ban imports from Iran and U.S. stockpiles declined.
Futures climbed as much as 0.6 percent after settling at the highest in three weeks. The EU may have reached an agreement to ban oil shipments from Iran, OPEC’s second-largest producer, EU Energy Commissioner Guenther Oettinger said yesterday. U.S. crude inventories fell 5 million barrels to 334.1 million last week, the lowest since January 2010, according to the American Petroleum Institute. Kuwait’s ruler dissolved parliament after corruption allegations sparked anti-government protests.
“Prices are slowly ticking up on the back of potential supply shocks,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who had forecast oil would trade from $80 to $90 a barrel before tension increased in the Gulf. “The market is still looking at what may or may not happen in terms of embargoes on Iran from the West. There’s also the potential for civil unrest in Kuwait.”
Crude for January delivery gained as much as 57 cents to $101.85 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.78 at 3:58 p.m. Singapore time. Yesterday, the contract added 29 cents to $101.28, the highest since Nov. 16. Prices are up 11 percent this year after climbing 15 percent in 2010.
Brent oil for January settlement on the London-based ICE Futures Europe exchange rose as much as 55 cents, or 0.5 percent, to $111.36 a barrel. The European benchmark contract was at a premium of $9.50 to New York-traded West Texas Intermediate grade. The spread reached a record $27.88 on Oct. 14.
Oil is rising because of the tension between Iran and the West, according to Seth M. Kleinman, European head of energy research at Citigroup Inc. in London. A boycott will probably be timed for after the winter peak-demand period in the Northern Hemisphere, he said in a report yesterday.
The threat to Iranian supplies will keep Brent crude above $100 a barrel in the winter while concern Europe’s debt crisis will worsen will cap prices at $120, Gordon Kwan, head of energy research at Mirae Asset Securities Co. in Hong Kong, said in a report today. Mirae kept its forecast for Brent to average $115 and West Texas $100 a barrel in 2012.
Oettinger indicated yesterday in Doha there may be consensus in Europe to halt imports of Iranian oil. He didn’t specify when a ban would be implemented.
Iran pumped about 5 percent of the world’s crude last year, according to BP Plc’s annual Statistical Review. The nation sits on one side of the Strait of Hormuz, through which about a fifth of the world’s supply of the commodity is transported, said the U.S. Energy Department. The 27 member states of the EU accounted for 16 percent of global oil demand.
The EU agreed to tighten sanctions on Iran at a meeting Dec. 1 in Brussels because of its nuclear program, blacklisting individuals and companies while falling short of authorizing an immediate ban. The U.S. approved additional curbs on Iran’s oil industry Nov. 21.
Political tensions in Kuwait, which supplies about 3 percent of the world’s crude, are obstructing the country’s progress, requiring “a return to the nation to choose its representatives,” according to a decree issued by Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah yesterday and cited by state news agency Kuna. It didn’t say when elections will be held. Kuwait’s cabinet, headed by Sheikh Nasser Al-Mohammed Al-Sabah, resigned Nov. 28 following months of protests calling for his ouster and a change in government.
Saudi Arabia, U.S.
Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, boosted output last month to the highest in more than three decades to meet demand, Ali al-Naimi, the nation’s oil minister, said yesterday in Durban. OPEC’s 12 members are scheduled to meet Dec. 14 in Vienna.
Crude stockpiles in the U.S., the world’s largest oil consumer, dropped 1.25 million barrels in the week ended Dec. 2, according to the median estimate of 12 analysts surveyed by Bloomberg News before an Energy Department report today.
Gasoline inventories are expected to have risen 875,000 barrels and distillate supplies probably climbed 1.15 million, based on the survey. Yesterday’s report from the industry-funded API showed gasoline stockpiles increased 5.97 million barrels and distillates gained 1.68 million.
Oil’s advance in New York may stall as futures reach technical resistance at $101.34 a barrel, according to data compiled by Bloomberg. This level is the higher of two leading- span lines that define a so-called ichimoku cloud on the weekly chart. Sell orders tend to be clustered near resistance levels.
--With assistance from Yee Kai Pin in Singapore. Editors: Paul Gordon, Aaron Sheldrick
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