Oil touched a nine-month peak on Wednesday, supported by Iran related supply worries, even as weak economic data in Europe and China cast doubt on the outlook for global growth, denting other demand sensitive assets.
Brent crude for April delivery was flat at $121.66 by 1350 GMT after touching the day’s high of $121.92, its highest since last May.
US crude for April was down 41 cents to $105.84 a barrel. The March contract, which expired on Tuesday, closed at $105.84 a barrel, the highest settlement for front-month NYMEX crude since May 4.
Asian and European buyers of Iranian crude are cutting purchases. The euro zone’s service sector shrank unexpectedly this month, reviving fears that the economy could sink into recession, Markit’s Eurozone Services Purchasing Managers’ Index showed on Wednesday.
China’s manufacturing sector contracted in February for a fourth straight month as new export orders dropped sharply in the face of the euro area debt crisis, stirring fears about fuel demand in the world’s second-largest oil user.
Evidence that the poor economic situation is having a direct impact on the fuel market came from Singapore Airlines, which cut its cargo capacity by 20 per cent as persistent weakness in demand and high jet fuel prices piled pressure on its profitability.