Oil traded near a three-day low in New York amid concern of slowing consumption in China after the country lowered its growth goal.
Futures were little changed after falling 2.8 percent last week, the first weekly decline in a month. China, the world’s second-largest oil user, will aim for economic growth of 7.5 percent this year, the lowest goal since 2004, Premier Wen Jiabao said today. Israeli Prime Minister Benjamin Netanyahu and U.S. President Barack Obama will meet today to discuss confronting Iran’s nuclear program, even as Obama asked Israel to help tone down “too much loose talk of war.”
“The lower growth target from China is negative for commodities because China has been the driver for oil prices in recent years,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The Iran crisis is preventing speculators from dropping their long positions in oil. It is serving as protection against a sharper price drop.”
Oil for April delivery on the New York Mercantile Exchange was at $106.65 a barrel, down 5 cents, at 1 p.m. London time after falling as much as 1.1 percent to $105.50. Prices are up 7.9 percent this year.
Brent oil for April settlement was at $124.24 a barrel, up 59 cents, on the ICE Futures Europe exchange in London. The European benchmark’s premium to West Texas Intermediate widened to $17.58 a barrel from last week’s close of $16.95.
The U.S. won’t hesitate to use military force against Iran if necessary, Obama told a conference of the American Israel Public Affairs Committee yesterday. There’s still time for diplomacy and sanctions to work, he said. Prices slid the most this year on March 2 after he said in an interview with the Atlantic magazine that a pre-emptive strike might generate “sympathy” for the Persian Gulf country.
Iran may shut the Strait of Hormuz if the country is threatened, Masoud Jazayeri, the country’s deputy chief of military staff, said in an interview, according to Iraq’s Biladi television. The waterway is a transit route for a fifth of the world’s oil.
Oil rose earlier after a fatal vehicle collision and fire at a pumping station this weekend prompted Enbridge Inc. to close the pipeline near Chicago.
“You can always gauge how nervous the market is” after news of a pipeline closure, said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “That’s the jittery nature of the market at the moment. Iran is still a wildcard.”
Local Price Pressure
Enbridge shut lines 14/64 and 6A after two people were killed and several others injured in the crash that ignited the fire at a pumping station near New Lenox, Illinois, about 36 miles (58 kilometers) southwest of Chicago.
The 6A line, with a capacity of 670,000 barrels a day, has since resumed, Calgary-based Enbridge said. The 14/64 line can carry 320,000 barrels a day. Line 14 is forecast to be shut until the evening of March 7 and 64 until the afternoon of March 8, Lorraine Little, a spokeswoman for Enbridge in Superior, Wisconsin, said in an e-mail.
“The pipeline closure could pressure local prices in the North American market, but I can’t see any price implications for global markets,” Commerzbank’s Fritsch said.
New York crude futures remain within an upward-sloping trend channel on the daily chart going back about a month, according to data compiled by Bloomberg. The bottom of this channel, representing technical support, is around $106.40 a barrel today. Buy orders tend to be clustered near chart-support levels.
Hedge funds increased net-long positions in New York crude oil by 5 percent to 272,032 in the seven days ended Feb. 28, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Wagers gained a fourth week to the highest since May 3, the report showed.
Money managers raised bullish bets on Brent crude by 18,907 contracts in the same period, according to data from ICE Futures Europe. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 126,802 lots, the exchange said today in its weekly report.