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Brent rises above $113 after blast in Iran 
SINGAPORE (Reuters) - Brent crude rose above $113 on Wednesday, reversing losses as a blast in Tehran added to concerns of supply disruption from Iran, overshadowing worries about demand growth due to Europe's debt crisis. Oil investors worry that tensions between the West and the Islamic republic could escalate further after the bombing, which comes as the United States seeks to persuade China to help efforts to toughen sanctions against the exporter. Brent rose 28 cents to $113.56 a barrel by 0906 GMT, up from an intraday low of $112.78. U.S. crude however was down 14 cents to $102.10 a barrel. "The market could be reacting to headlines of the blast and further price gains are possible during London and New York trading time, depending on Iran's reaction," said Ken Hasegawa, a derivatives manager with brokerage Newedge in Tokyo. Analysts said the market was eyeing a European Union (EU) meeting on January 23 to decide on an oil embargo on Iran as it refuses to abandon its nuclear programme. "I think the geopolitical risk factors will keep the market supported," said Tony Nunan, a risk manager at Mitsubishi Corp. "We still have the January 23 meeting coming up and the Nigerian unrest." Protests in Nigeria that started out as nationwide opposition to the scrapping of a fuel subsidy have escalated into religious conflicts, threatening oil exports. Nunan expects the uncertainty to keep U.S. oil supported above $95, with Brent being about $10 a barrel higher. EUROPE DEBT ISSUES Worries over Greece's finances, which is racing to conclude a deal and secure continued funding without which it will default in March, made oil pare some of the previous session's gains earlier in the day. Fitch Ratings could also downgrade by one or two notches countries under review such as Italy or Spain, even though it doesn't expect to cut France's triple-A credit rating this year, the agency's EMEA ratings head said on Tuesday. Higher crude inventories in the United States could have capped further gains in prices. U.S. crude stockpiles were up 397,000 barrels in the week to January 6, according to data from the industry group the American Petroleum Institute. A clearer picture on inventories will emerge with numbers from the U.S. Energy Information Agency later in the day. A Reuters poll of 10 analysts forecast an 800,000-barrel rise in domestic oil inventories, with all but two analysts expecting a build in stocks. Brent is neutral in a range of $111.80-$114.64 per barrel, but is biased to fall, while U.S. oil will fall to $101.16 per barrel, according to Reuters technical analyst Wang Tao. (Editing by Manash Goswami, Himani Sarkar) |
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