Investing.com - Crude oil futures swung between gains and losses on Wednesday, but remained close to the previous day’s nine-month high as simmering tension between Iran and the West overshadowed concerns over a slowdown euro zone manufacturing activity and sustained fears over Greece.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.14 a barrel during U.S. morning trade, easing down 0.11%.
The April contract traded in a range between USD105.63, the daily low and a session high of USD106.41. On Tuesday, prices rose to USD106.46 a barrel, the highest since May of last year.
Oil traders continued to monitor tensions between Tehran and Western powers after the International Atomic Energy Agency said Iran refused permission to visit the Parchin military base during two days of talks that ended Tuesday.
Also Tuesday, the head of Iran’s state oil company said that if other European nations continued “hostile acts” it would stop exporting oil to them as well, after halting crude shipments to French and British companies over the weekend.
The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.
Growing tensions between Iran and Israel also remain in focus. Iran’s military started a four-day air defense exercise in a 190,000 square kilometer area in southern Iran to protect nuclear sites threatened by possible Israeli attacks.
The risk of a military conflict in a region was further underscored after Mohammad Hejazi, deputy head of the general staff of the Iranian Armed Forces said Iran may launch a preemptive strike to protect its facilities.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
Iran is the world’s third largest oil exporter, after Saudi Arabia and Russia. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Crude prices came under pressure earlier after preliminary data showed that manufacturing activity in the euro zone improved less-than-expected in February, remaining in contraction territory for the seventh consecutive month.
Data from Germany and France showed modest growth in business activity, albeit at a slower pace than in January, but activity in peripheral euro zone nation’s showed a steep decline this month.
Markets were also jittery after Fitch Ratings cut Greece’s credit rating to C from CCC and reiterated that a bond-swap agreement with private creditors would be a restricted default.
Fitch said it would review its stance on Greece again once the debt swap had been completed.
A preliminary estimate of HSBC’s China manufacturing Purchasing Managers’ Index, which showed an improvement from January but remained in contractionary territory for the fourth consecutive month also weighed.
Meanwhile, oil traders were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show crude stockpiles rose by 1.0 million barrels last week, as rising North American output and the planned reversal of the Seaway pipeline bolstered stockpiles.
This week’s U.S. EIA report comes out a day later than usual because the government and financial markets were closed for the Presidents’ Day holiday.
The U.S. is the world’s largest oil consuming nation, accounting for nearly 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.6% to trade at USD122.41 a barrel, with the spread between the Brent and crude contracts standing at USD16.27.
Brent prices were boosted after Goldman Sachs recommended traders buy Brent contracts for July 2012 to take advantage of rising prices.
"Upside price risks are rising as the market finds itself in the unprecedented situation in which OPEC spare capacity is at a trough just as a world economic recovery is gaining momentum," the investment bank said in a report published Tuesday.
Crude output in Sudan, Yemen. Nigeria and the North Sea is also lower, hurt by geopolitical and production issues.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.14 a barrel during U.S. morning trade, easing down 0.11%.
The April contract traded in a range between USD105.63, the daily low and a session high of USD106.41. On Tuesday, prices rose to USD106.46 a barrel, the highest since May of last year.
Oil traders continued to monitor tensions between Tehran and Western powers after the International Atomic Energy Agency said Iran refused permission to visit the Parchin military base during two days of talks that ended Tuesday.
Also Tuesday, the head of Iran’s state oil company said that if other European nations continued “hostile acts” it would stop exporting oil to them as well, after halting crude shipments to French and British companies over the weekend.
The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.
Growing tensions between Iran and Israel also remain in focus. Iran’s military started a four-day air defense exercise in a 190,000 square kilometer area in southern Iran to protect nuclear sites threatened by possible Israeli attacks.
The risk of a military conflict in a region was further underscored after Mohammad Hejazi, deputy head of the general staff of the Iranian Armed Forces said Iran may launch a preemptive strike to protect its facilities.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
Iran is the world’s third largest oil exporter, after Saudi Arabia and Russia. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Crude prices came under pressure earlier after preliminary data showed that manufacturing activity in the euro zone improved less-than-expected in February, remaining in contraction territory for the seventh consecutive month.
Data from Germany and France showed modest growth in business activity, albeit at a slower pace than in January, but activity in peripheral euro zone nation’s showed a steep decline this month.
Markets were also jittery after Fitch Ratings cut Greece’s credit rating to C from CCC and reiterated that a bond-swap agreement with private creditors would be a restricted default.
Fitch said it would review its stance on Greece again once the debt swap had been completed.
A preliminary estimate of HSBC’s China manufacturing Purchasing Managers’ Index, which showed an improvement from January but remained in contractionary territory for the fourth consecutive month also weighed.
Meanwhile, oil traders were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show crude stockpiles rose by 1.0 million barrels last week, as rising North American output and the planned reversal of the Seaway pipeline bolstered stockpiles.
This week’s U.S. EIA report comes out a day later than usual because the government and financial markets were closed for the Presidents’ Day holiday.
The U.S. is the world’s largest oil consuming nation, accounting for nearly 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.6% to trade at USD122.41 a barrel, with the spread between the Brent and crude contracts standing at USD16.27.
Brent prices were boosted after Goldman Sachs recommended traders buy Brent contracts for July 2012 to take advantage of rising prices.
"Upside price risks are rising as the market finds itself in the unprecedented situation in which OPEC spare capacity is at a trough just as a world economic recovery is gaining momentum," the investment bank said in a report published Tuesday.
Crude output in Sudan, Yemen. Nigeria and the North Sea is also lower, hurt by geopolitical and production issues.