Forexpros – Crude oil futures swung between small gains and losses on Tuesday, amid concerns over the global economic outlook and ongoing fears over a disruption to supplies from Iran.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.83 a barrel during European morning trade, easing up 0.1%.
The April contract traded in a tight range of USD106.52 a barrel, the daily low and USD107.33, the session’s high.
Markets continued to fret over an economic slowdown in China after Chinese Premier Wen Jiabao said Monday that the government will target an expansion of 7.5% in 2012, the lowest growth target in eight years.
Data pointing to the euro zone possibly slipping back into recession further weighed on prospects for future oil demand growth.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of Europe’s debt crisis.
China is the world’s second largest consumer after the U.S. and has been the engine of strengthening demand, while the euro zone accounted for nearly 16% of global oil consumption in 2010, according to data from British Petroleum.
But prices continued to draw support from ongoing tensions between Iran and the West and a potential disruption to oil supplies from the region.
In a speech at a conference of the American Israel Public Affairs Committee on Monday, Israeli Prime Minister Benjamin Netanyahu called on the international community to acknowledge the fact that Iran was developing nuclear weapons.
Netanyahu added that Israel “cannot afford to wait much longer” and warned that his country would not live in the “shadow of annihilation.”
His comments came after meeting with U.S. President Barack Obama at the White House on Monday to discuss options regarding Iran.
Obama told Netanyahu “there is still a window” for a diplomatic solution to the confrontation, reiterating the U.S.’ willingness to see if sanctions would force Iran to halt its nuclear program.
Netanyahu is expected to meet Congressional leaders later Tuesday and meet with U.S. Secretary of State Hillary Clinton.
The two countries have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
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 produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the OPEC, after Saudi Arabia.
The International Atomic Energy Agency added to the concerns about the Persian Gulf country’s nuclear program, saying there were indications of activities at an Iranian military site its inspectors want to visit.
French lender Societe Generale said in a report earlier that, “The supply risk premium to Iran is supporting prices, but the main volatility is from the demand side.”
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was flat to trade at 123.81 a barrel, with the spread between the Brent and crude contracts standing at USD16.98.
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