Forexpros – Crude oil prices were up sharply on Monday, trading at the highest level since early May after Iran said it halted some crude exports to Europe, while expectations that euro zone policy makers will approve a second bailout for Greece and the introduction of fresh monetary easing by China further supported sentiment.
On the New York Mercantile Exchange, light sweet crude futures for delivery in March traded at USD105.05 a barrel during European afternoon trade, rallying 1.45%.
The March contract is due to expire at the end of trading on Tuesday, February 21.
Meanwhile, the more actively traded contract for April delivery surged 1.67% to trade at USD105.33 a barrel, the highest since May 5, 2011.
Crude prices advanced for the fourth consecutive day, the longest streak of gains since December after Iran’s Ministry of Petroleum said Sunday the country has halted sales of crude oil to British and French companies.
“Exporting crude to British and French companies has been stopped,” government spokesman Alireza Nakza said. “We will sell our oil to new customers,” he added.
According to a report in the Financial Times, the Middle Eastern country is trying to move an additional 50,000 barrels of oil a day to refiners in India and China, citing “two industry executives familiar with the talks.”
The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Iran is the world’s third largest oil exporter, after Saudi Arabia and Russia. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Crude prices found further support after the People’s Bank of China announced over the weekend that it cut the reserve requirement ratio for major commercial banks to 20.5% from 21%, the second cut in nearly three months.
The move was expected to free up as much as CNY400 billion in an effort to boost lending and spur growth in the world’s second-biggest economy.
China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2012.
Meanwhile, optimism over Greece’s chances of obtaining its second bailout package further boosted sentiment.
Speaking ahead of a meeting of euro zone finance ministers set for later Monday, Greek Finance Minister Evangelos Venizelos said negotiations on the EUR130 billion bailout and a linked debt restructuring deal would continue until the last minute but added that Greece has met all the conditions demanded by its creditors.
Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.
Trade was expected to remain subdued throughout the day as NYMEX floor trading was to remain closed for the U.S. Presidents Day holiday. Electronic trades were to be booked with Tuesday’s transactions for settlement purposes.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.6% to trade at USD120.28 a barrel, with the spread between the Brent and crude contracts standing at USD14.95.
Wall Street lender JP Morgan raised its average Brent price forecast for 2012 by 5% to USD118 a barrel, citing geopolitical issues in Iran, Nigeria and South Sudan.
The bank also raised its 2013 forecast for Brent to USD125 a barrel, up from USD121.
“Ongoing decline in mature areas, supply risks in key producing countries together with the underperformance of some new frontier areas leave us to feel that it will be a greater risk in 2013/2014 than this year,” the bank said.
“More importantly, building economic momentum, albeit from a weak base, has the potential to pull oil prices higher for the next 12 to 24 months.”
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