Bloomberg: Crude oil rose to a three-month high, nearing $67 a barrel in New York, on concern shipments may be disrupted from Iran, which accounts for almost 5 percent of world production. Jan. 18 (Bloomberg) — Crude oil rose to a three-month high, nearing $67 a barrel in New York, on concern shipments may be disrupted from Iran, which accounts for almost 5 percent of world production.
The U.S., Britain and France want the United Nations Security Council to consider measures including sanctions over Iran’s refusal to abandon nuclear research. Such action might limit investment in Iranian oil production, or prompt the nation to retaliate by cutting exports.
“Iran is the real threat because there’s just so many ways it could play out,” said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. “This is the one that could actually get us to $100.”
Crude oil for February delivery rose as much as 60 cents, or 0.9 percent, to $66.91 in after-hours electronic trading on the New York Mercantile Exchange, the highest price since Sept. 30. The contract traded at $66.83 at 10:19 a.m. London time. Prices, which reached a record $70.85 on Aug. 30, are 38 percent higher than a year ago.
Yesterday, the contract jumped $2.39, or 3.7 percent, to $66.31, the highest close since Sept. 29 and the biggest one-day gain since Sept. 19, when Hurricane Rita threatened the U.S. Gulf of Mexico coast. Oil also rose after unrest in Nigeria cut output.
In Tokyo, oil futures rose to a record. Iran is the third- largest supplier of oil to Japan, where demand has been boosted by cold winter weather.
Oil for June delivery on the Tokyo Commodity Exchange, Asia’s biggest energy futures market, rose by an exchange-imposed limit of 1,200 yen to 44,160 yen a kiloliter ($60.72 a barrel).
Iran produced 3.9 million barrels of crude oil a day last month, according to data compiled by Bloomberg. Saudi Arabia, the world’s biggest oil exporter, has 1.3 million barrels a day of spare production capacity.
Brent crude for March settlement added 45 cents, or 0.7 percent, to $65.35 a barrel on London’s ICE Futures exchange.
Nigerian militants threatened further attacks on oil companies, Sky News reported yesterday. The African country’s output is down 9 percent because of pipeline blasts and kidnappings. Nigeria was the fourth-biggest source of U.S. oil imports in October, the most recent month available.
Shell’s Nigerian venture shut its EA field, which has a capacity of 115,000 barrels a day, on Jan. 11 after four foreign oil workers were kidnapped from a boat near the field. It was also losing 106,000 barrels a day because of a Jan. 11 explosion at a pipeline in the Brass Creek area of the Niger River delta.
“The threats remind us of how tight the supply-demand balance is,” said John Kilduff, vice-president of risk management at Fimat USA in New York. “These threats can’t be dealt with; there just isn’t enough spare capacity, so prices are moving higher and will continue to do so.”
World oil demand will accelerate throughout 2006 as Chinese and U.S. consumption picks up, the International Energy Agency said. Demand will grow 2.2 percent to 85.1 million barrels a day, after gaining 1.3 percent last year, the agency, an adviser to 26 consuming nations, said yesterday in a monthly report.
Oil prices more than doubled in 1979 after a revolution in Iran slashed the nation’s oil exports. By 1981, U.S. refiners were paying an average $35.24 a barrel, according to Energy Department figures, or $75.44 in 2005 dollars.
Yesterday’s leap in prices was compounded by the recent flow of investment funds into commodities, Excel’s Waggoner said. The Iran risk has turned the market bullish and that will, in turn, drive more funds into oil, he said.
`Jumping on Board’
“Everybody will be jumping on board this train,” he said.
Commodities have had better returns than other financial tools over the past year, attracting hedge funds and other large speculators. The Reuters Jefferies CRB Index, which tracks commodity futures, is 21 percent higher than a year ago and reached a record 342.45 yesterday.
The U.S. held 133.7 million barrels of distillates, including heating oil and diesel, in the week ended Jan. 6, the Energy Department said Jan. 11. Supplies probably gained another 2.35 million barrels last week, according to the median forecast in a Bloomberg News survey of 10 analysts.
Gasoline supplies, currently at 208.8 million barrels, probably gained 1.78 million barrels, based on the survey. Crude oil supplies, up 11 percent from a year earlier at 318.7 million barrels, probably fell by 100,000 barrels.