Oil complex settles higher Tuesday as Iran tensions mount
New York (Platts)--3Jul2012/421 pm EDT/2021 GMT
Crude and product futures settled higher in moderate pre-holiday US
trading Tuesday as tensions escalated between the West and Iran.
NYMEX August crude settled $3.91 higher at $87.66/barrel, after reaching
an intra-day high of $88.04/b.
ICE August Brent settled $3.34 higher at $100.68/b. Front-month ICE
Brent futures climbed above $100/b for the first time since June 11.
Front-month Brent futures are up around 13% since hitting an 18-month
low on June 22.
In products, NYMEX August RBOB settled 9.90 cents higher at $2.7229/gal.
Heating oil futures settled 8.26 cents higher at $2.7585/gal.
"The possibility of quantitative easing, Iranian military exercises that
raise geopolitical tensions, and an ongoing partial strike by Norwegian
oil workers are all helping to support the advance" in crude and
products, Citi Futures Perspectives analyst Tim Evans wrote in an
afternoon note.
The IMF, in a report released Tuesday, highlighted the risks remaining
of "excessive fiscal tightening in the United States," suggesting action
should be taken to avoid what the report referred to as the US "fiscal
cliff."
Analysts believe the IMF is trying to cajole US policymakers into moving
forward with another round of stimulus.
"We have Iran, a weaker dollar, and the IMF telling [the US] to do more
stimulus, and people don't want to be short going into a holiday," said
Phil Flynn, senior market analyst for Price Futures Group.
IRAN'S PARLIAMENT RATTLES SABERS
Iran helped to ratchet up tensions after the start of the latest round
of US and EU sanctions as a large number of parliamentarians there
signed a bill that would back the preventing of tankers from exiting the
Persian Gulf via the Strait of Hormuz.
Meanwhile, the US has moved "significant" military reinforcements into
the Persian Gulf to keep the key Strait of Hormuz open to oil shipping
and boost the number of fighter planes capable of striking deep into
Iran if the standoff over Tehran's nuclear program escalates (See story,
1519 GMT).
Western leaders have stressed that they want a diplomatic solution to
the impasse, and have been intensifying pressure on Iran through
increasingly tough sanctions.
First exports from Abu Dhabi's new 1.8 million b/d pipeline, meant to
skirt the crucial strait, are not expected before end-July, senior oil
officials said Tuesday (See story, 1540 GMT).
The pipeline, which will have capacity to carry 1.8 million b/d of Abu
Dhabi's crude, was due to start up in January 2011, but has been delayed
repeatedly because of problems with pumping stations along the 36-km
(250-mile) route from the Habshan fields to the emirate of Fujairah.
And more uncertainty loomed for Norwegian production as unions decided
Tuesday to continue their strike over pension arrangements.
Now in its second week, the strike was called on June 24 after a
breakdown in talks over pensions. Norwegian daily crude output has
fallen by some 240,000 b/d, representing some 15% of the country's oil
output.
--James Bambino,
james_bambino@platts.com
--Edited by Robert DiNardo,
robert_dinardo@platts.com
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