Brent jumps $1.10/bbl on Iranian nuclear, Nigerian supply fears

London (Platts)--17Jan2006

IPE Brent crude futures rose sharply early Tuesday in London on Nigerian
crude production outages and international concern about Iran's nuclear
program. 
     The February Brent contract on the Intercontinental Exchange's changed
hands at $64.21/bbl at 1105 GMT, up 102 cts from Monday's settle. Brent had
jumped as much $1.10/bbl in early trading. 
     European, Russian, Chinese an US officials agreed to convene a meeting at
the International Atomic Energy Agency on Feb 2. The meeting will address how
to handle Iran's nuclear program. 
     Iran's economy minister said Sunday oil prices could rise to unexpected
levels if sanctions were levied on Tehran. "Any sanctions in the current
situation would be more detrimental for the West than for Iran," Davoud
Danesh-Jaafari told state television.
     In Nigeria, a militant group behind the attacks on the country's oil
infrastructure said it aimed to totally destroy the country's capacity to
export oil. 
     The International Energy Agency report out Tuesday also impacted prices. 
    "Fund buying and the latest IEA report also fueled the bullish sentiment,"
one London-based broker said. Global demand increased by some 1.3% in 2005 and
should grow by 2.2% in 2006 as demand rebounds in the US and China, the IEA
report said.
     Meanwhile, non-commercials, which are primarily comprised of hedge funds,
added 7,823 contracts of crude futures and options, as of Jan 10, the
Commodity Futures Trading Commission data showed.
     Non-commercials were long 62,133 contracts of crude futures and options,
and short 722 lots of futures only. The buying kept the active front-month
contract well bid above the $64/bbl level. 
     Commercials, which are comprised of oil companies, refiners and banks
were willing sellers, adding 19,070 crude futures and option contracts,
leaving them short a total of 56,739 lots. 
     Non-commercials added 4,125 contracts of unleaded gasoline futures and
options, leaving them long 32,718 lots. Non-commercials added 2,153 contracts
of heating oil futures and options, leaving them long 7,640 lots.

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