US crude up $2/bbl on Iran supply worries, China data

03 January 2012 08:48  [Source: ICIS news]

SINGAPORE (ICIS)--US crude futures rose by more than $2/bbl on Tuesday supported by upbeat economic data from China and supply concerns heightened by geopolitical tensions between the West and Iran.

At 08:30 GMT, February NYMEX light sweet crude futures (WTI) were trading at $100.54/bbl, up $1.71/bbl on the previous close. Earlier the US benchmark rose to a session high of $100.91/bbl, up by $2.08/bbl from the previous close.

February Brent crude on London’s ICE futures exchange was trading at $108.72/bbl, up $1.34/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $109.00/bbl, up by $1.62/bbl.

Tensions between Iran and the US and other western powers intensified on Tuesday amid announcements from Tehran that it had made a major advance in its controversial nuclear programme with the testing of its own uranium fuel rods.

Iran also said it successfully tested-fired a new medium range missile.

Western powers have imposed sanctions on Iran amid heightened concerns that Iran is developing nuclear weapons.

Tehran has denied the claims and says its nuclear programme is for peaceful purposes.

The moves from Iran come amid ongoing 10 day exercises by the Iranian Navy in the in the strategically important Strait of Hormuz through which oil exports from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Iran are shipped.

Iran has threatened to prevent oil movements through the Straits of Hormuz if sanctions are imposed on its oil exports.

Iran is the world’s fourth largest oil producer with an output of around 3.55m bbl/day. It is also the third largest oil exporter, according to data from the International Energy Agency (IEA).

Meanwhile, Washington has further tightened sanctions against Iran with US President Barack Obama signing a new law on Saturday aimed at Iran’s financial system.

The new measures will enable the US to take legal action against foreign business which have financial dealings with Iran’s central bank.

The crude market was also buoyed by upbeat manufacturing data from China.

Chinese government data revealed that the purchasing managers index (PMI) rose to 50.3 in December.

A figure above 50 signifies an expansion in the economy. In November PMI figure was 49.

The news raised optimism over the strength of the Chinese economy in 2012.

Additional Reporting Ignacio Sotolongo

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