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Oil Trades Near 5-Week High After Mehr Says Iran to Cut Exports to Europe

Oil traded near a five-week high in New York after the Mehr news agency said Iran halted shipments to Europe and U.S. crude inventories fell for the first time in four weeks.

Futures were little changed after climbing 1.1 percent yesterday. Iran stopped crude exports to France and the Netherlands and threatened to end shipments to four other European countries, state-run Mehr reported, citing an unidentified official at the National Iranian Oil Co. U.S. stockpiles fell 171,000 barrels last week, data from the Energy Information Administration showed. They were projected to rise 1.5 million barrels, according to a Bloomberg News survey.

“The market is certainly watching what’s happening in Iran but I don’t think it’s willing to build in that escalation premium yet,” David Lennox, an analyst at Fat Prophets in Sydney, said by telephone today. “The U.S. inventory decline has a fairly short-term impact on prices.”

Oil for March delivery was at $101.56 a barrel, down 24 cents, in electronic trading on the New York Mercantile Exchange at 3:51 p.m. Singapore time. The contract yesterday increased $1.06 to $101.80, the highest close since Jan. 10. Prices are 20 percent higher than a year ago.

Brent oil for April settlement rose 10 cents to $119.03 a barrel on the ICE Futures Europe exchange. The European benchmark contract’s premium to New York-traded West Texas Intermediate for the same month was at $17.16, compared with $16.79 yesterday. It reached a record of $27.88 on Oct. 14.

Conflicting Reports

The state-run Fars news agency gave a conflicting account to the Mehr report, saying Iran warned the six European Union nations without cutting exports to any of them. An Iranian oil ministry official, declining to be identified, said yesterday he was unable to confirm a decision to suspend shipments. The EU also said it wasn’t immediately able to confirm a halt.

“If any military action against Iran is taken, it poses a huge risk to oil supplies and should raise the fear premium in oil prices even further,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. Data from the U.S. Energy Department“ was surprisingly supportive, with crude stocks showing an unexpected decline.”

Gasoline stockpiles rose 400,000 barrels last week, figures from the EIA showed. They were projected to climb 700,000 barrels, according to the median of 13 analyst estimates in the Bloomberg News survey. Distillate supplies, a category that includes diesel and heating oil, fell 2.9 million barrels compared with an estimate for a 1.1 million barrel drop.

Oil in New York has technical resistance along the upper Bollinger Band, near where futures halted yesterday’s advance, according to data compiled by Bloomberg. This indicator is at about $102.66 a barrel today. Sell orders tend to be clustered close to chart-resistance levels.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net

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