Oil up on supply worry, US data

Oil rose on Thursday in choppy trading, with US crude reaching $100 a barrel, as violence in Iraq and news of upcoming Iranian navy exercises raised fears of potential supply disruptions. Oil also received a boost from separate reports showing jobless claims fell last week in the United States, while consumer sentiment rose more than expected in December, offsetting news that third-quarter economic growth was pegged lower than the previous estimate.
Dominick Chirichella, analyst at New York's Energy Management Institute, said financial markets were entering a period of low liquidity and could expect relatively large intraday moves over the end-year festive season. "Iran and the broader Middle East, including Iraq now that the United States is gone, will continue to act on the oil market with exposure for price spikes at anytime. The geopolitics of the region are once again on the radar," he said.
Brent February crude rose 43 cents to $108.14 a barrel by 1:02 pm EST (1802 GMT), having reached $108.50. Possible resistance at Brent's 100-day moving average of $109.30 loomed above. US February crude rose $1.03 to $99.70 a barrel, having reached $100. Both Brent and US crude trading volumes were less than 175,000 lots traded, with Brent 65 percent below the 30-day average and US volume 75 percent below its 30-day average.
US crude oil implied volatility fell a fifth consecutive day to a nearly five-month low of 34.25 percent after opening at its high for the day at 36.37 percent, using the Chicago Board Options Exchange's Oil Volatility Index as a proxy. A rash of bombings hit Baghdad in the first big attack on Iraq's capital since a crisis between its Shia Muslim-led government and Sunni rivals erupted after the withdrawal of US troops.
Adding to the geopolitical fear premium for oil, Iranian state television quoted a navy commander as saying the Islamic Republic's navy will conduct a 10-day war game in an area from east of the Strait of Hormuz to the Gulf of Eden starting on Saturday. In Kazakhstan, KazMunaiGas Exploration Production said it expected to meet a reduced oil output target for the year after police deployed armed security around the oilfield closest to the scene of this week's riots.
Opec-member Nigeria has suffered an actual supply disruption. Royal Dutch Shell said its 200,000 barrels per day deepwater Bonga facility, which accounts for around 10 percent of Nigeria's output, is now shut with no planned restart date after an oil leak on Tuesday. Nigeria will load around 1.93 million bpd of crude oil in February, according to trade sources, meaning exports will be below the 2011 average even if the Bonga oilfield returns to production promptly.
But even with current fears for and actual disruptions, Seaborne oil exports from Opec, excluding Angola and Ecuador, are expected to rise by 400,000 bpd in the four weeks to January 7, according to UK consultancy Oil Movements latest weekly estimate. Additional support for oil prices arrived in a report showing new US claims for unemployment benefits fell last week to their lowest in more than 3-1/2 years, dropping 4,000 to a seasonally adjusted 364,000.
US consumer sentiment improved in December to its highest level in six months, adding lift to oil prices. Crude prices pared gains and briefly seesawed near flat after data showed US gross domestic product grew at a 1.8 percent annual rate in the third quarter, down from the previously estimated 2 percent.