Brent crude prices rose and settled at an 11-month peak on Tuesday as improving German economic sentiment, rising US retail sales and the US central bank's reiteration that it plans to keep interest rates low fuelled optimism about economic growth.
After a one-day meeting, the US Federal Reserve also acknowledged signs of strength in the economy and said recent financial market strains have eased, offering few clues on the chances for further monetary easing. "The Fed decision is supportive for the oil market," said John Kilduff, partner at Again Capital LLC.
"By not announcing further measures, for now, current conditions that have improved modestly and that have rallied energy prices off their October lows should continue to be the primary factor in determining price direction," Kilduff added.
Brent April crude rose 88 cents to settle at $126.22 a barrel, the highest close since April 8, 2011, having swung from $125 to $126.79. US April crude rose 37 cents to settle at $106.71 a barrel, having reached a high of $107.35. It fell as low as $105.67 intraday, testing below its 10-day moving average at $106.73 and 20-day moving average at $106.01.
Brent's premium to US crude firmed to $19.51 a barrel, based on settlements. German analyst and investor sentiment jumped in March to its highest since June 2010, according to the Mannheim-based ZEW economic think tank's monthly survey, well above the consensus forecast.
Brent and US crude briefly turned lower intraday when the strong US retail sales data stoked the dollar and investors awaited signals from the Fed policy meeting. The dollar touched an 11-month high against the yen and a one-month peak against the euro. The dispute between Iran and the West over Tehran's nuclear program has helped send Brent prices up nearly 18 percent in 2012, and US crude up 8 percent.
Iran has lowered April official selling prices for most of its crude oil, while raising them for Asia, according to trade sources said. Any increase in Opec production to offset European Union sanctions on importing Iranian oil ahead of the July 1 embargo is unlikely, Gulf sources said, though the United States is pressing Saudi Arabia to boost output to fill the expected supply gap.
A US official declined to comment on the talks, saying only, "We consult regularly with the Saudis on a range of bilateral and global energy issues." Saudi Oil Minister Ali al-Naimi and Opec Secretary General Abdullah al-Badri are expected to focus on high oil prices in their addresses to the International Energy Forum on Wednesday.
US commercial crude inventories are expected to have risen 1.7 million barrels in the week to March 9, according to an expanded Reuters survey of analysts on Tuesday. Distillate and gasoline stocks are expected to have fallen. High prices dented US retail gasoline demand last week, pushing it 1.4 percent lower from the previous week and 7.2 percent from the year-ago period, MasterCard said in its weekly SpendingPulse report.
Comments
Comments are closed for this article.