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Crude Oil Rises Amid Middle East Tension, Heads for Weekly Gain

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Dec. 2 (Bloomberg) -- Oil rose, heading for its first weekly gain in three, as tension between Iran and the West heightened speculation Middle East supply may be threatened.

Futures gained as much as 0.8 percent and were up 4.1 percent for the week. European governments tightened sanctions on Iran, the second-biggest oil producer in the Organization of Petroleum Exporting Countries, in a clampdown over the Persian Gulf nation’s nuclear program. The U.K. yesterday ordered Iran to close its embassy in London after a mob attack on the British legation in Tehran bought international condemnation.

“We have a dangerous possibility of a war, at the worst, so we always have to put some premium in this market,” said Ken Hasegawa, a commodity sales manager at broker Newedge Group in Tokyo, who sees New York oil futures trading between $98.50 and $101.50. “Even though the economic situation is worse than at the beginning of the year, the oil price will be staying at this high level.”

Crude for January delivery was up 60 cents at $100.80 a barrel in electronic trading on the New York Mercantile Exchange at 4:12 p.m. in Singapore today. It earlier declined as much as 31 cents to $99.89 a barrel.

Brent oil for January settlement was at $109.85 a barrel, up 86 cents, on the London-based ICE Futures Europe exchange. The contract slid $1.53, or 1.4 percent, to $108.99 yesterday.

The European contract’s premium to West Texas Intermediate crude traded in New York declined 16 cents to $9.05 a barrel. The spread surged to a record $27.88 on Oct. 14.

Jobless Rate

Oil also rose before a U.S. Labor Department report today that may show 125,000 workers were added last month, according to the median estimate in a Bloomberg News survey of economists. The jobless rate probably held at 9 percent, the survey showed.

Oil futures may fall next week as unemployment stays near that level, a separate Bloomberg News survey showed. Eleven of 24 analysts, or 46 percent, forecast oil will fall through Dec. 9. Nine, or 38 percent, predicted a gain, and four said there will be little change. Last week, 57 percent of those surveyed projected a drop.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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