Oil rose in New York on signs that the US economic recovery is reducing the nation's crude inventories, and on concern that tensions with Iran may lead to disruptions in exports from the Middle East.
Futures advanced as much as 1.2 per cent after the American Petroleum Institute said crude inventories slid the most in six weeks in the seven days ending January 13. Energy Department data yesterday showed supplies climbed for a fourth week, according to a Bloomberg News survey of analysts before the API numbers were released. Iran's ambassador to the United Nations said on Wednesday that closing the Strait of Hormuz, the passageway for about a fifth of the world's oil trade, is an option if his country's security is endangered.
"It was a big draw" in crude inventories reported by the API, said Hannes Loacker, an analyst at Raiffeisen AG in Vienna. "So expectations for the Energy Department numbers definitely become more bullish. On the other hand, this may bring disappointment if the crude numbers do not drop.
Crude for February delivery gained as much as $1.21 to $101.80 (Dh373.9) a barrel in electronic trading on the New York Mercantile Exchange and was at $101.71 at 10.30am London time. The contract, which expires today, is up 2.9 per cent this year. The more active March contract rose $1.11 to $101.87.
Article continues below
Brent oil for March settlement advanced 82 cents, or 0.7 per cent, to $111.48 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract's premium to West Texas Intermediate futures was at $9.61, compared with $9.90 on Wednesday and a record $27.88 on October 14.
‘'There is no decision to block and close the Strait of Hormuz unless Iran is threatened seriously and somebody wants to tighten the noose,'' Ambassador Mohammad Khazaee said on the Charlie Rose show, according to a transcript of the interview. ‘'All the options are, or would be, on the table.''
US crude inventories dropped 4.81 million barrels last week, the most since the week ended December 2, figures from the industry-funded API showed. They are forecast to climb three million barrels in the energy department report, according to a Bloomberg News survey.
* 1.2%: advance in oil futures after inventory slide
* $1.21: gain in crude forFebruary per barrel
* $111.48: price of Brent crude per barrel for March