March 26 (Bloomberg) -- Crude oil rose to its highest in three months after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening concern supplies from the Middle East will be disrupted.
The capture of the British marines in the Persian Gulf was described as ``a very serious situation'' by U.K. Prime Minister Tony Blair. The UN gave Iran 60 days to suspend uranium enrichment and voted to freeze assets of a state-owned bank on March 24.
``The build-up of offensive force will continue in coming weeks and tensions will increase further,'' said Olivier Jakob, the managing director at Zug, Switzerland-based Petromatrix GmbH. ``All segments of our radar screen are positive'' for keeping oil prices supported.
Crude oil for May delivery climbed as much as 61 cents, or 1 percent, to $62.89 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Dec. 26. It was at $62.77 at 11:10 a.m. in London.
In London, Brent crude oil for May settlement increased as much as 73 cents, or 1.2 percent, to $63.91 a barrel in electronic trading on the ICE Futures exchange. It was at $63.70 at 11:10 a.m. London time.
The New York-traded contract gained 4.5 percent last week on speculation U.S. demand for motor fuel will set records this summer. Oil prices have gained 2.4 percent this year.
Gasoline futures for April delivery rose 1.47 cents, or 0.7 percent, to $2.01 a gallon in after-hours trading on Nymex at 11:11 a.m. London time. Prices are up 25 percent this year.
Iranian Tension
Almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf. The captured marines were members of an Anglo- American task force patrolling Iraqi territorial waters in the Gulf and protecting its oil terminals. They had just searched a merchant vessel in Iraqi waters when they were seized, Britain's Ministry of Defence said last week. Iran said they had entered its territory.
``Everybody is rattling his saber,'' said Anthony Nunan, the assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``The fact that the sanctions are ratcheted up is a bullish factor, because it keeps delaying the day that investments in the Iranian upstream can take off.''
The International Atomic Energy Agency referred Iran to the UN Security Council in February 2006. Iran will reduce its cooperation with the agency in response to the new sanctions, Agence France- Presse reported, citing a government statement to the state-owned news service.
Oil reached a record $78.40 a barrel on July 14 after Israeli troops invaded Lebanon to attack Iranian-backed Hezbollah militia operating there. It had fallen as low as $50.48 on January 18 and was trading between $61 and 62 a barrel on March 23, before the marines were seized.
Gasoline Market
The more widely held May gasoline contract was trading for $1.97 a gallon at 11:13 a.m. London time after rising 4.2 percent last week.
``The market is a little concerned about adequate gasoline supplies as U.S. inventories have been declining for several weeks and we're near the beginning of the driving season,'' said Andy Sommer, an analyst at HSH Nordbank AG in Hamburg.
U.S. gasoline pump prices rose 6 cents during the past two weeks to an average $2.61 a gallon, the highest price since September, according to Trilby Lundberg, a U.S.-based analyst who surveys 7,000 filling stations nationwide.
Gasoline stockpiles in the U.S., the world's largest oil consumer, have fallen for six weeks. Demand, which usually peaks between the Memorial Day holiday in late May and Labor Day in early September, was 2.1 percent higher than a year earlier in the four weeks ended March 16, the Energy Department said last week.
Bets on rising oil prices held by hedge fund managers and other large speculators reached the highest in almost seven months last week as investors reduced contracts to sell oil.
Contracts to buy oil outnumbered contracts to sell by 44,366 contracts on March 20, up 20 percent from a week earlier, according to U.S. Commodity Futures Trading Commission data. The net-long positioned jumped as investors cut their bets on falling prices for a fifth straight week.
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KLCI up 8 points at 1244 recording 8 days of upticks & it's statiscally significant after 8-10 days of uptick,market expected to correct.Noting hourly chart in FKLI display -ve bearish divergences.Warning bulls to use cautions as iminent correction overdue??
Oil spikes after rumour of Gulf action
By Neil Dennis
Published: March 28 2007 10:06 | Last updated: March 28 2007 10:06
Oil prices were on high alert on Wednesday, with US crude spiking more than $5 in after-hours trade on rumours of hostilities in the northern Persian Gulf.
The initial spike – as high as $68.09 for Nymex crude – was caused by rumours that Iran had fired a missile at a US warship in the Persian Gulf. The US has built up a strong presence in the area, including 15 ships and more than 100 aircraft, since tensions between Iran and the west escalated over Iran’s nuclear ambitions.
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The rumour was swiftly denied by the US, but crude prices in mid-morning London trade remained nearly 2 per cent higher than the previous session’s close, reminding investors of the fragile geopolitical situation in the Gulf.
Brent crude was $1 higher to $65.60 a barrel, while Nymex West Texas Intermediate was up $1.10 to $64.03 a barrel.
”Although the missile story turned out to be false, the Iranian abduction of British sailors is very real and has yet to play itself out,” said Edward Meir at Man Financial.
Markets have been increasingly nervous since 15 British sailors and marines were captured in Iranian waters more than week ago. Since March 20, Nymex crude has risen by nearly 13 per cent on fears the situation will not be solved diplomatically.
On Wednesday British foreign secretary Margaret Beckett cut short an official visit to Turkey to address parliament on the hostage situation.
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