Forexpros – Crude oil futures pared gains on Wednesday, easing off a five-week high after Iran’s Oil Ministry denied earlier reports that it stopped its crude exports to six European countries as investors continued to monitor developments surrounding Greece.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD101.83 a barrel during U.S. morning trade, gaining 0.74%.
It earlier rose by as much 1.95% to trade at USD102.89 a barrel, the highest since January 12.
Crude prices spiked higher 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.
“We deny this report. If such a decision is made, it will be announced by Iran’s Supreme National Security Council,” a spokesman for the ministry said earlier.
Meanwhile, growing fears that Greece was headed towards a messy sovereign debt default also weighed on prices after Reuters reported that EU officials are looking at ways to delay the second bailout and still avoid a default amid concerns that political leaders in Greece are not fully committed to implementing harsh austerity measures demanded by international creditors.
According to the article, top-rated sovereigns Germany, Finland and the Netherlands are leading the push to delay Greece’s bailout until April.
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.
Meanwhile, oil traders were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 2.9 million barrels last week to 337.8 million, while gasoline stockpiles advanced 1.81 million barrels.
The U.S. Energy Information Administration’s more closely-watched weekly report on U.S. stockpiles of crude and refined products was scheduled for release later Wednesday.
The report was expected to show that U.S. crude oil stockpiles rose by 1.7 million barrels last week, while gasoline supplies were forecast to increase by 0.7 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 1.05% to trade at USD118.59 a barrel, with the spread between the Brent and crude contracts standing at USD16.76 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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