Crude futures rise on Iran tensions, supply worries

27 September 2012 14:23  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures strengthened on Thursday, rising by more than $1/bbl amid heightened tensions in the Middle East, leading to fears of supply disruptions.

Concerns over Iran’s nuclear programme were raised following an address to the UN by Iranian President Mahmoud Ahmadinejad today. The Iranian leader accused the US and other Western powers of intimidation in their attempts to prevent the development of Iran’s nuclear capabilities and said his country was under a military threat from Israel.

It is widely-believed in the western world that Iran is in the process of developing nuclear weapons, while Tehran maintains that it is pursuing a nuclear programme is for peaceful purposes.

Israeli Prime Minister Benjamin Netanyahu is to address the UN later today.

At 12:11 GMT, November Brent crude on London’s ICE futures exchange was trading at $111.20/bbl, up by $1.16/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $111.34/bbl, up by $1.30/bbl.

November NYMEX light sweet crude futures (WTI) were trading at $91.05/bbl, up by $1.07/bbl from the previous close. Earlier, the US benchmark rose to a session high of $91.10/bbl, up by $1.12/bbl.

Further support for crude was generated by an unexpected 2.4m bbl fall in US crude inventories, and unexpected 0.5m bbl declines in gasoline and distillate stocks, according to weekly data from the Energy Information Administration (EIA) released on Wednesday.

However, upside pressure on crude was offset to some extent by concerns over eurozone debt and the weak Greek and Spanish economies following street protests against austerity measures introduced by Governments in Madrid and Athens.

Bank of Spain warned in a report released earlier this week that the Spanish economy had continued to significantly contract in the third quarter which pushed Spanish borrowing rates higher.

Greece plans to implement spending cuts of around €11.5bn ($15bn) in order to meet requirements for the next €31bn euro instalment of its bailout.

$1 = €0.78
By: James Dennis
+65 6780 4327

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