Crude oil futures settled little changed and below $100 a barrel after the West's energy watchdog reiterated that it doesn't see any disruption in oil supplies now, but could tap emergency stockpiles if needed.
The comments, from the head of the International Energy Agency, came after oil prices had climbed 2% earlier after Iran said it was considering an immediate halt to crude oil exports to the European Union. That move, Iran said, would be in response to the EU trade embargo set to take effect July 1. Iran sells about 600,000 barrels a day of crude to EU nations.
An Iranian lawmaker said the parliament will consider the cutoff at a meeting on Sunday. Such a move would send European oil buyers scrambling for replacement supplies, closing the six-month window the EU built into its embargo plan agreed upon earlier this week. The EU set the embargo to ratchet up pressure on Tehran to halt its nuclear program. But Iranian lawmakers want an abrupt halt of the exports--accounting for 5.8% of EU needs in 2010--in order to push prices higher and hurt European economies.
Maria van der Hoeven, IEA executive director, said there isn't a need for an emergency oil release now, but the agency continues to monitor the oil markets in light of mounting tensions over Iran.
"Emergency stocks are there, but they can only be used if there is a real, very serious disruption of supplies," van der Hoeven said Thursday. "And at this moment, this is not the case." She repeated the IEA view that global oil markets remain tight despite concerns about slowing economic growth. Analysts said that makes the market ripe for a spike on any break in the normal supply chain.
"Any time you start taking any oil off the market, there's upward pressure on prices. The market will react instantaneously and then wait to see if the gap is filled," said Tom Bentz, a director of BNP Paribas Prime Brokerage.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled up 30 cents at $99.70 a barrel, a one-week high. The contract rose 2% intraday to a high of $101.39 a barrel, and fell late in the session to a low of $99.23 a barrel.
ICE Brent crude for March settled 98 cents higher, at $110.79 a barrel. That was the biggest rise since Jan. 4.
"Iran likes to talk a lot, but whether they will follow through remains questionable," said Gene McGillian, analyst at Tradition Energy. "For now, the market seems to have found an area around $100 a barrel that it wants to float around."
"It's a scary situation right now," said Bentz, adding that tensions over Iran add about $5-$10 a barrel to current prices. In response to U.S.-led efforts to tighten sanctions, Iran has at times threatened to close the Strait of Hormuz, the vital shipping outlet for about 20% of the world's oil.
Ali Naimi, Saudi Arabia's oil minister, said recently that the kingdom's oil output could be quickly increased to around 11.8 million barrels a day, while it would take about 90 days to bring production to capacity of 12.5 million barrels a day. The Saudis said they pump 10 million barrels a day in November, and the IEA estimated the December flow at 9.85 million barrels a day.
Meantime, U.S. oil data shows the level of demand than can be met by stockpiles continued to top five-year average levels. But the cushion is the smallest in two months.
Traders said the market, which is still seeking clear signals of a sustained economy recovery, got another mixed picture Thursday.
Jobless claims rose by 21,000 last week, slightly below the expected increase of 23,000. December orders for durable goods rose for a third straight month, with the 3% rise topping economists' forecasts for a 2% gain. But new-home sales decreased by 2.2% in December after three monthly rises. Economists' forecasts had called for a 1.9% rise.
February heating oil futures settled 3.43 cents higher, at $3.0535 a gallon. The rise was the biggest since Jan. 4 and put prices at the highest level since Jan. 12.
Copyright (c) 2012 Dow Jones & Company, Inc.
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