Wednesday, November 30, 2011

Oil rises on U.S. consumer data, Iran-UK row

NEW YORK (Nov 29): Oil prices rose on Tuesday on a report of improved U.S. consumer confidence, an Italian bond auction attracting demand and after an attack by Iranian protesters on two British embassy compounds in Tehran.

U.S. consumer confidence rose from a 2-1/2 year low in November as apprehension about job and income prospects eased, according to a private sector report that boosted oil and equities on Wall Street.

"A combination of the geopolitical risks related to the Iranian situation and the positive U.S. consumer confidence data have boosted oil futures," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

With tensions over Iran's controversial nuclear program already raising the geopolitical fear premium for oil, Iranian protesters stormed two British Embassy compounds in Tehran in a protest against sanctions imposed by Britain.

An Iranian lawmaker had warned on Sunday that angry Iranians could storm the British Embassy as they did the U.S. mission in 1979.

"The situation has ratcheted up on the UK Embassy storming," said John Kilduff, a partner at Again Capital LLC in New York. "The situation has been growing more tense and this is certainly an agent provocateur with stakes as high as they can be in terms of global oil supplies."

Investor relief after Italy managed to sell bonds, though borrowing costs hit euro lifetime peaks, pushed oil higher early on Tuesday.

ICE Brent January crude up a second straight session, rose $1.82 to settle at $110.82 a barrel, a penny above the front-month Brent 200-day moving average and having reached $111.

U.S. January crude rose $1.58 to settle at $99.79 a barrel, reaching $100.15, but unable to move above Monday's $100.74 high.

Both crude contracts were poised to post monthly gains.

Brent crude trading volumes were 10 percent above the 30-day average and U.S. volumes were only 12 percent below the 30-day average.

The Brent premium to its U.S. counterpart moved above $11 a barrel intraday.


In addition to the Iranian situation, Syria continued to keep investors wary of the tenuous stability in the Middle East and Africa and the potential for a sudden supply interruption.

Turkey said it did not want military intervention in Syria but was ready for any scenario to deal with President Bashar al-Assad's crackdown on popular unrest.

Oil prices also received support from Sudan's decision to halt the South Sudan's oil exports over a transit fee dispute.


The euro advanced for a second straight session on speculation the European Central Bank could lend money to the International Monetary Fund to help Italy cope with the debt crisis. The dollar index .DXY weakened, adding lift for dollar-denominated commodities like oil.

Euro zone ministers struggled to ramp up the firepower of their rescue fund and looked to the IMF for more help after Italy's borrowing costs neared 8 percent.


Crude oil stockpiles in the United States rose 3.4 million barrels last week, the industry group American Petroleum Institute said in a report released after crude futures settlement on Tuesday.

Distillate stocks increased 1.3 million barrels and gasoline inventories fell 173,000 barrels, according to the API report.

Ahead of the API report, crude oil stocks were expected to have dipped, by only 200,000 barrels, with distillate stocks expected to be down 1.1 million barrels and gasoline stocks up 1.5 million barrels, according to a Reuters survey of analysts.

Holiday travel lifted U.S. retail gasoline demand last week versus the previous week, but demand remained well below the year-ago period, MasterCard said in a separate report.

The U.S. Energy Information Administration's inventory report is due on Wednesday at 10:30 a.m. EST (3:30 p.m. British time).

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