Oil above $123 on US, China data
LONDON OIL rose above $123 a barrel on Thursday as better-thanexpected economic data from China and the United States bolstered the demand outlook and concern persisted about supply disruption from Iran.
A Chinese government survey on Thursday showed factories’ output grew more than expected in February, following on from a report on Wednesday showing the US economy grew faster than initially thought in the fourth quarter.
Brent crude rose 78 cents to $123.44 a barrel by 1147 GMT, rebounding from an earlier decline to as low as $122.49 and a dip down to $120.50 on Wednesday. US oil was up 14 cents to $107.21.
“The sell-off yesterday may have marked the bottom,” said Christopher Bellew, a broker at Jefferies Bache in London. “The existing supply- side disruptions and risk of them getting worse are supporting prices - Iran, the continuing conflict in Syria.” Brent posted a monthly gain of 10.5 percent in February and reached $125.55, its highest intraday price since May 2, on Friday, supported by growing tension between the West and Iran about its nuclear program and concern about cuts in its oil supply.
Prices fell earlier this week as technical indicators such as the relative strength index for Brent suggested the rally was overdone, and some participants still see signs that the oil market rally is fragile.
“Technically, crude oil was saved in the last five minutes of the session but it still leaves crude oil in the danger zone given that it made lower highs and lower lows yesterday,” said Olivier Jakob, analyst at Petromatrix.
Supplies from Iran, the second-largest OPEC producer after Saudi Arabia, remain the key risk for the global market.
A US government report said on Wednesday Western sanctions on Iran were already disrupting its oil exports, and further restrictions could tighten global oil markets.
US and European insurance companies are declining to insure deliveries of Iranian oil even before the full Western sanctions go into effect, according to the report by the Energy Information Administration on Wednesday.
The risk of future disruption to supplies from Iran has pushed signs that actual oil supplies are ample, and output from the Organisation of the Petroleum Exporting Countries is rising, onto the back burner.
US crude oil stockpiles rose 4.16 million barrels last week, the EIA reported on Wednesday, a bigger increase than analysts expected which pressured US crude.