Brent jumps to 6-month high on Europe cold snap
Brent oil rose for a fifth straight session on Monday to settle at a six-month high as cold weather in Europe boosted heating fuel demand and pushed the crude's premium to US oil to the highest since November.
February 07, 2012 / 11:47 IST
Brent oil rose for a fifth straight session on Monday to settle at a six-month high as cold weather in Europe boosted heating fuel demand and pushed the crude's premium to US oil to the highest since November.
European gasoil led gains across the oil complex, rising more than 3.5 percent as bitter weather killed another 33 people in Europe.Italy announced it would allow electricity providers to fire up oil-fueled generators to limit natural gas after six-straight days of reduced supplies from Russia.Additional support for Brent came amid supply concerns from OPEC members Iran and Nigeria."The cold weather is giving us a lift in the products and that is feeding through to Brent," said Rob Montefusco, a trader at Sucden Financial in London. "Also, any sort of trouble in the Middle East is likely to keep Brent well bid."U.S crude fell, however, dragged down by concerns about weak consumption and rising inventories that increased the contract's discount to Brent to more than USD 19 a barrel from more than USD 2, the largest discount since November.Traders said the premium could blow out levels eclipsing those seen last year over USD 28 a barrel as Midwest refinery turnarounds and rising pipeline flows boost inventories in the region, home to the Cushing, Oklahoma, delivery point to the New York Mercantile Exchange's oil futures contract.Brent March crude rose USD 1.35 to settle at USD 115.93 a barrel, highest close since August 2. Monday's trade ranged from USD 113.65 to USD 116.22. The USD 116.22 was the highest since USD 116.48 intraday on November 8.US March crude fell 93 cents to settle at USD 96.91 a barrel, having slumped as low as USD 96.38.Heating oil prices traded up nearly 2.3% in late activity, despite forecasts that US total heating demand would run about 14.5% below normal and heating oil demand would be 20.5% below normal.Trading volumes were heavy, with Brent volume about 22% above the 30-day moving average and US crude about 18% over that average.The euro weakened against the dollar after the failure of Greek coalition parties to approve the terms of a new bailout package rekindled worries about a chaotic default.The dollar index edged up and a stronger US currency can pressure dollar-denominated oil by making the commodity more expensive for consumers using other currencies.Threats to supplyTraders also eyed developments in the Middle East and Nigeria, where a police station was the site of the latest attack by suspected Islamist militants.Iran's Revolutionary Guards deputy commander said on Sunday that Tehran would target any country used as a launching pad for attacks against its soil. Iran's supreme leader last week threatened reprisals for the West's ban on Iranian oil exports in the standoff over Tehran's nuclear program.China, the largest consumer of Iranian crude, will halve its crude oil imports from Iran in March versus year-ago levels as a dispute over payments and prices stretches into a third month, oil industry sources involved in the deals said.Asia's imports of West African crude are at record highs as sanctions on Iran reduce supplies, a Reuters survey of West African flows suggest.In Syria an explosion ripped through an oil pipeline feeding a main refinery in the city of Homs, the second in a week to hit the pipeline. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
