Forexpros – Crude oil futures edged higher on Wednesday, amid persistent fears over a disruption to supplies from Iran and after China said it would boost energy imports this year, but gains were limited amid concerns over a potential Greek default.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD105.21 a barrel during European morning trade, gaining 0.5%.
It earlier rose by as much as 0.65% to trade at a session high USD105.38 a barrel. Prices fell to USD104.51 on Tuesday, the lowest since February 17.
Oil prices continued to draw support from concerns over a potential disruption to oil supplies from Iran and worries over its nuclear program.
The Persian Gulf country produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.
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.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
On Tuesday, six world powers announced that they were ready to restart negotiations with Iran over its nuclear program. The six countries include the U.S., the U.K., France, Germany, China, and Russia.
But the time and location of the talks have yet to be determined.
The stand-off between Iran and Western countries has dominated sentiment in the oil market for weeks, raising fears that the escalating row over Tehran’s nuclear program could lead to an oil-export halt, a disruption to shipping traffic in the Strait of Hormuz or military conflict.
Prices found additional support after China’s trade ministry said earlier that the country plans to boost energy imports in 2012. China is the world’s second largest consumer after the U.S. and has been the engine of strengthening demand.
But gains were limited as markets remained jittery ahead of the March 8 deadline for bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
There is uncertainty over how much participation Greece will see for its bond swap. The Greek government has set a minimum 75% participation rate to proceed.
A failure to agree on the swap would put the country back on the brink of a messy sovereign debt default and could reignite fears about the collapse of the single currency.
Meanwhile, oil traders were also looking forward to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products later in the day.
The report was expected to show that U.S. crude oil stockpiles rose by 1.5 million barrels last week, while gasoline supplies were forecast to decline by 2.0 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 4.6 million barrels last week, while gasoline stockpiles fell 2.3 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was up 0.67% to trade at 122.78 a barrel, with the spread between the Brent and crude contracts standing at USD17.57.
Forexpros
