KUALA LUMPUR: Brent crude futures edged above $107 a barrel on Monday on fears that tensions over Iran's nuclear programme, and clashes in Egypt and Syria, may disrupt Middle Eastern output as demand for fuel rises ahead of the Northern Hemisphere winter.
The uncertainty has made investors refrain from selling oil contracts even as the euro zone debt crisis threatens to slow economic growth as well as fuel consumption.
Brent crude traded at $107.67 a barrel, up 11 cents, by 0303 GMT. Futures had fallen in the previous three sessions, paring this year's gains to 14 percent. US oil climbed 11 cents to $97.78. Prices have increased 4.8 percent this month after an 18 percent jump in October.
In comments broadcast on Sunday, the energy minister of OPEC president Iran told Al Jazeera television that his country could use oil as a political tool in the event of any future conflict over its nuclear programme.
The United States also plans to sanction Iran's petrochemical industry, sources familiar with the matter said on Friday, seeking to raise pressure on Tehran after fresh allegations it may be pursuing nuclear weapons.
"At this point, the geopolitics is more important to the market because it's happening at a time when fundamentals show it's a tight market amid the peak demand season," said Gordon Kwan, head of energy research at Mirae Asset Securities Ltd. in Hong Kong.
"People just don't want to short oil now," he said, forecasting Brent will average $115 in 2012, assuming a lack of political tensions in the Middle East.
Syrian President Bashar al-Assad vowed on Sunday to continue a crackdown against protests calling for an end to more than four decades of rule by his family, a move likely to intensify international pressure on the oil-producing nation and that may result in sanctions from other Arab states.
In Egypt, at least 12 people were killed in clashes between security forces and crowds protesting against the ruling military council in some of the worst violence since the overthrow of Hosni Mubarak.
The focus on Middle East production will continue until next month, when the Organization of Petroleum Exporting Countries (OPEC) will hold a Dec. 14 meeting after its last congress ended in acrimony when Iran and Venezuela, among others, blocked a Saudi Arabia-led push for an OPEC-wide output increase.
A bearish target at $106.10 a barrel is unchanged for Brent as there will be no strong support above this level, according to Reuters technical analyst, Wang Tao.
The grim outlook for commodities was compounded by concern that US lawmakers may fail to come to an agreement on a plan to trim the nation's deficit.
A US congressional committee looked set to concede failure in its bid to cut at least $1.2 trillion from the deficit over the next 10 years. While the group has until midnight on Wednesday to bridge deep partisan differences over taxes and spending, comments from congressional aides suggested the group would admit defeat on Monday.
Comments
Comments are closed for this article.