Oil futures held onto early gains Wednesday after a government report showed a small decline in U.S. crude stockpiles. Light, sweet crude for March delivery rose 64 cents, or 0.7%, to $101.38 a barrel on the New York Mercantile Exchange. The U.S. Energy Information Administration said inventories of crude oil fell by 200,000 barrels in the week ended Feb. 10. Stockpiles were expected to rise by 1.3 million barrels, according to a survey of analysts by Dow Jones Newswires.
Oil prices were little changed by the report as it also showed a 2-million-barrel increase in stockpiles at the U.S. oil hub of Cushing, Okla., signaling that supplies are growing at a key transit point. But futures remained elevated as concerns about Iran’s reaction to an EU oil embargo held most traders’ attention. Brent crude, the European benchmark, shot to a six-month high just shy of $120 a barrel on the ICE Futures Europe earlier Wednesday after a report from Iranian state television said Tehran will cut off oil sales to six E.U. countries–France, Greece, Italy, the Netherlands, Portugal and Spain.
Prices retreated somewhat to recently trade 1.3% higher at $188.86 a barrel as Reuters later reported that Iran’s oil minister denied the report, saying that if such a decision is made “it will be announced by Iran’s Supreme National Security Council.” The mix of U.S. data and worries about tensions between Iran and the West underscores the competing factors that have kept U.S. oil prices in a tight band near $100 for months. Traders are fearful that an outbreak of military action with Iran could send prices surging, which has put a floor on prices. But demand for fuel products in the U.S. remains subdued, and worries about Europe’s debt situation have also kept a lid on prices.
EasyForexNews Research Team