Update 7: Oil Prices Rise More Than $1 Per Barrel after Iran moves
02.01.2006, 01:35 PM
Crude-oil futures prices rose by more than $1 a barrel Wednesday in
spite of U.S. government data showing crude oil and gasoline supplies
on the rise. The market remains jittery about geopolitical tensions
ranging from the West's nuclear standoff with Iran to the war in Iraq
and unrest in Nigeria.
Analysts said the uptrend also reflected speculative buying as well as
short-covering, in which traders who had expected prices to be lower by
now must cover their bets.
In its weekly petroleum supply report, the Department of Energy said
commercial inventories of crude oil climbed last week by 1.9 million
barrels to 321 million barrels, or 11 percent above year ago levels.
Gasoline inventories grew by 4.2 million barrels to 219 million
barrels, or roughly equal to last year's level.
But light sweet crude for March delivery rose 88 cents to $68.80 a
barrel in afternoon trade on the New York Mercantile Exchange, where
natural gas futures rose by 23 cents to $9.553 per 1,000 cubic feet on
concerns about cold weather in the U.S.
The Energy Department report showed a slight decline in inventories of
distillate fuels, which include diesel and heating oil. Nymex heating
oil futures were essentially flat at $1.85 a gallon, while gasoline
futures were also little changed at $1.797 per gallon.
Iran, the Organization of Petroleum Exporting Countries' second-largest
oil producer, insists its nuclear program is aimed at generating
electricity, but the U.S. and other countries fear the research could
be used to create nuclear weapons.
The U.S., Britain, France, China and Russia say Iran should appear
before the U.N. Security Council, which could impose sanctions. They
have called on the International Atomic Energy Agency, the U.N. nuclear
watchdog, to report the Iran case when it meets Thursday.
Even though Iran's oil minister Kazem Vaziri Hamaneh has said Iran
won't link the country's oil exports to its nuclear dispute, analysts
said tensions over the issue would prevent any sharp decline in crude
futures.
"We still feel that despite the Iranian oil minister's assertions, the
threat of halting oil exports is a very effective bargaining chip,
which is maintaining a healthy risk premium in the market," said Sucden
Commodity brokers.
These supply fears come at a time when Nigeria's exports have been
reduced because of recent violence against oil companies and as Iraqi
production remains hindered by sabotage and a lack of security.
Iraq exported 508 million barrels, or 1.41 million barrels a day in
2005. That was a 4.7 percent drop from 2004, when it exported 533
million barrels, or 1.48 million barrels a day.
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