Oil Rises to 9-Month High; Iran Says Halts Europe Exports

Oil rose to a nine-month high in New York after Iran said it halted some crude exports and investors bet that fuel demand will increase as Europe moves closer to bailing out Greece.

Futures climbed as much as 2.1 percent for a fourth day of gains, the longest rising streak since December. Iran will supply crude to “new customers” instead of companies in the U.K. and France, the oil ministry’s news website, Shana, said, citing Alireza Nikzad Rahbar, a spokesman. Prices also advanced as European finance ministers prepared to meet to discuss a 130 billion-euro ($172 billion) aid package for Greece, the country’s second rescue in less than two years.

“The heightened level of tension surrounding Iran’s nuclear program continues to support prices, as does satisfactory growth in the U.S. and China,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted last week that the price of Brent crude would advance to $120 a barrel.

Crude for March delivery rose as much as $2.20 to $105.44 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday price since May 5. The contract, which expires tomorrow, last traded at $104.92 at the 1:15 p.m. New York close of Globex electronic trading. The more actively traded April contract gained $1.66 to $105.26. Prices increased 4.6 percent last week and are up 6.2 percent so far this year.

Brent oil for April settlement on the London-based ICE Futures Europe exchange climbed as much as $1.57, or 1.3 percent, to $121.15 a barrel before settling at $120.05. The European benchmark contract was at a premium of $15.13 to New York-traded crude. The gap was a record $27.88 on Oct. 14.

Preempting Ban

Iran’s suspension of exports followed a warning by its oil minister that Tehran might preempt a European Union ban on purchases of the nation’s crude planned to start July 1, Rahbar said without giving further details, according to the Shana report yesterday. The EU and U.S. imposed sanctions on Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, in an attempt to halt its nuclear program.

EU nations bought a combined 18 percent of Iran’s crude and condensate exports, or 452,000 barrels a day, in the first half of 2011, according to the most recent data on the website of the U.S. Energy Information Administration. France purchased 2 percent of Iran’s shipments, or 49,000 barrels a day, while the U.K. took less than 1 percent, the data showed.

Sufficient Stockpiles

The EU said it has sufficient supplies of oil and petroleum products to weather a disruption in Iranian supplies. Stockpiles are at 136 million tons or 120 days of consumption, “well above the 90-day minimum,” Marlene Holzner, an EU spokeswoman, said today in an e-mailed statement.

“The continuity of supplies of crude oil and petroleum products to European consumers should therefore not be immediately affected, even in case of an abrupt halt of all imports from Iran,” Holzner said.

Total SA, France’s biggest oil company, has stopped buying Iranian crude, Chief Executive Officer Christophe De Margerie told Bloomberg Television in a Jan. 27 interview in Davos. A Total spokesman didn’t respond to calls to his mobile phone or an e-mail yesterday.

BP Plc doesn’t buy crude from Iran, David Nicholas, a London-based spokesman, said by phone. An official for Royal Dutch Shell Plc, Europe’s largest energy company, said she had no comment when contacted by phone in London, asking not to be identified due to internal policy.

Finance Ministers Meeting

European governments moved toward a second rescue of Greece, calculating that the 130 billion-euro ($172 billion) cost of a fresh bailout is a price worth paying to prevent a default that could shatter the euro area.

Finance ministers will weigh the terms of new loans to Greece and a possible contribution by central banks at a meeting today in Brussels. They also aim to start a bond exchange with private investors meant to stave off a Greek bankruptcy next month.

Greek Prime Minister Lucas Papademos told ministers this weekend he found all the extra spending cuts needed to secure a bailout, according to an e-mailed transcript of a Feb. 18 cabinet meeting in Athens.

“Sentiment in the market has changed in the last week,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo who predicts oil will reach $110 a barrel in the near term. “We had news that Iran stopped some exports so that might have pushed up prices. The euro countries have no choice but to accept an agreement; otherwise everything will collapse.”

Oil also increased with stocks after China cut reserve ratios at its banks to boost lending and economic growth as the country’s housing market cools and the European debt crisis weighs on exports. The MSCI Asia Pacific index was up 0.8 percent at 128 in Tokyo, extending the longest run of weekly gains since 2005.

Technical Resistance

China accounted for about 11 percent of global oil demand in 2010 and the 27 EU member states consumed 16 percent, according to BP’s annual Statistical Review of World Energy.

Crude in New York opened today’s trading above long-term technical resistance at $103.39 a barrel, according to data compiled by Bloomberg. On the weekly chart, that’s the 61.8 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year. Buy orders tend to be clustered above chart-resistance levels.

“With the break in resistance, probably some fresh buying is coming into the market,” said Emori at Astmax. “Crude completely broke $100 so I think that will now be a very important support level.”

Hedge Funds

Hedge funds and other large speculators boosted their net- long position in crude futures to the highest level in nine months, according to the U.S. Commodity Futures Trading Commission. Managed-money bets that prices will rise, in futures and options combined, outnumbered short positions by 233,889 contracts in the week ended Feb. 14, the Washington-based regulator said in its report on Feb. 17. Net-long positions rose by 28,180 contracts, or 13.7 percent, from a week earlier.

Money managers raised bullish bets on Brent crude by 6,818 contracts last week, according to data from the ICE Futures Europe exchange. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 97,213 lots, the London-based exchange said today in its weekly Commitment of Traders report. That’s up from 90,395 lots the previous week.

March-delivery gasoline rose 3.55 cents, or 1.2 percent, to $3.0511 a gallon on the Nymex. Prices gained 1.4 percent last week, and are up 14 percent so far this year.

Heating oil for March delivery gained 2.73 cents, or 0.9 percent, to $3.2162 a gallon on the exchange.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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