Oil Rises to Nine-Month High on Greece, Iran
Oil increased to a nine-month high after Greece won a second bailout and Iran said it stopped selling crude to France and Britain.
Futures rose 2.5 percent after the euro-area ministers approved 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing debt relief, shielding the region from a default. Iran stopped selling oil to the countries yesterday, preempting a European Union ban, an official news website said.
“There’s a lot of relief about the Greek situation in the market and Iran is making a lot of noises,” said Kyle Cooper, director of research at IAF Advisors, a Houston-based energy consulting company. “The Greek agreement has increased optimism about the economy.”
Crude oil for March delivery gained $2.60 to $105.84 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Futures have risen 7.1 percent this year. The March contract expired at the close of floor trading.
The more active April contract increased $2.65, or 2.6 percent, to $106.25 a barrel on the Nymex. Floor trading was closed yesterday because of the U.S. Presidents Day holiday.
Brent oil for April settlement increased $1.61, or 1.3 percent, to $121.66 a barrel on the London-based ICE Futures Europe exchange, also a nine-month high.
Greece will enjoy an economic rebound now that European finance ministers have approved the rescue package, IIF managing director Charles Dallara said in a Bloomberg Television interview in Brussels.
“The Greece news is part of what rallied the market,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “The market is up after the Iranians cut off supplies to some European countries.”
Brent touched $121.88 today, the highest level since May 5, following Iran’s announcement of the oil export halt. The European Union on Jan. 23 agreed to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
Iran “will give its crude oil to new customers instead of French and U.K. companies,” the Shana oil ministry news website reported yesterday, citing Alireza Nikzad Rahbar, a ministry spokesman.
The Iranian decision will have “no impact on Britain’s energy security or supplies,” U.K. Foreign Secretary William Hague said yesterday.
EU nations bought a combined 18 percent of Iran’s exports of crude and condensates, or 452,000 barrels a day, in the first half of 2011, according to the U.S. Energy Department. France purchased 49,000 barrels a day and the U.K. 11,000 barrels.
“The sanctions are making it increasingly difficult for Iran to sell oil,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “You are effectively taking Iran out of the global market to some extent, and that’s a big deal.”
Iran pledged to press on with its efforts to develop atomic energy as the United Nations nuclear watchdog started a second day of meetings in Tehran.
“The oil market popped on the Iran headlines,” said Phil Flynn, senior market analyst at PFGBest Research in Chicago. “We got an extra dollar on the headlines, which dashed hopes that there may return to serious negotiations.”
Oil also gained as the Dow Jones Industrial Average topped 13,000 for the first time since May 2008 and the Standard & Poor’s 500 Index traded above the highest close since 2008. Both indexes retreated after crude settled.
Hedge funds and other money managers raised wagers on advancing oil prices by 14 percent in the week ended Feb. 14 to 233,889, according to the Commodity Futures Trading Commission’s Commitments of Traders report. It was the highest level since May 10.
Electronic trading volume on the Nymex was 669,407 contracts as of 3:36 p.m. in New York. Volume totaled 723,843 contracts on Feb. 17, 21 percent above the three-month average. Open interest was 1.46 million contracts.
To contact the reporter on this story: Moming Zhou in New York at email@example.com
To contact the editor responsible for this story: Bill Banker at firstname.lastname@example.org