Forexpros – Crude oil futures held on to gains on Wednesday, showing a muted reaction to a report showing an unexpected drop in U.S. crude supplies, as traders continued to monitor developments surrounding a disruption to Iranian oil exports and a potential Greek default.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD101.73 a barrel during U.S. morning trade, gaining 0.65%.
It earlier rose by as much 1.95% to trade at USD102.89 a barrel, the highest since January 12.
Crude prices traded at USD101.66 prior to the release of the Energy Information Administration data.
The U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 0.2 million barrels in the week ended February 10, confounding expectations for a 1.7 million barrel increase. U.S. crude supplies rose by 0.3 million barrels in the preceding week.
Total U.S. crude oil inventories stood at 339.1 million barrels as of last week, remaining in the upper limit of the average range for this time of year.
Total motor gasoline inventories increased by 0.4 million barrels, below expectations for a 0.7 million barrel gain, after climbing by 1.6 million barrels in the preceding week.
Crude prices spiked higher earlier in the day after Iran’s Press TV reported that the Islamic Republic stopped exporting oil to the Netherlands, Greece, France, Portugal, Spain and Italy in retaliation to an embargo the European Union approved last month.
But prices retraced those gains after Iran’s Oil Ministry denied the state media reports.
Meanwhile, Reuters reported that EU officials are looking at ways to delay the second bailout amid concerns that political leaders in Greece are not fully committed to implementing harsh austerity measures demanded by international creditors.
Without a bailout, Greece faces the threat of defaulting when a EUR14.5 billion bond redemption comes due on March 20.
Euro zone finance ministers have replaced a meeting aimed at signing off on Greece’s bailout scheduled to take place later in the day with a conference call, after failing to receive assurances on how Athens plans to implement fiscal reforms approved in a parliamentary vote on Sunday.
Euro zone developments have dominated trading in the oil market for the last several months, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 1.5% to trade at a six-month high of USD119.11 a barrel, with the spread between the Brent and crude contracts standing at USD17.38 a barrel.
Brent prices were boosted by fresh supply worries from South Sudan, after Sudan seized another 2.4 million barrels of crude over a continued dispute on payment issues.
South Sudan seceded from Sudan in July under a 2005 peace deal that ended decades of civil war, but the two countries have remained at odds over issues including oil, debt and fighting along the poorly drawn border.
Oil output was also halted from Yemen’s Masila oilfield, the country’s largest, after workers went on strike over pay issues.
Brent prices could rise to as high as USD120 a barrel, according to Goldman Sachs, saying “OPEC spare capacity is approaching dangerously low levels, just as world economic growth is beginning to strengthen.”
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