Oil rose on signals the U.S. economy is weathering Europe’s debt crisis and amid speculation that escalating tension in the Middle East may disrupt supplies.
Crude advanced for the seventh time in eight days after a measure of U.S. jobless claims fell to a three-year low and pending sales of existing homes jumped for a second month. Iran threatened this week to block crude shipments through the Strait of Hormuz if sanctions are imposed on its oil exports.
“We are getting support from the U.S. economic data,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas. “More than anything else, possible confrontation with Iran is pushing up oil.”
Crude oil for February delivery gained 29 cents, or 0.3 percent, to settle at $99.65 on the New York Mercantile Exchange. Prices have gained 9.1 percent this year.
Inventory Report
Inventories (DOESCRUD) rose 3.9 million barrels to 327.5 million in the week ended Dec. 23, the Energy Department reported. Supplies were forecast to drop 2.5 million barrels, based on the median of 10 analyst estimates in a Bloomberg News survey. The American Petroleum Institute said late yesterday that crude supplies climbed 9.57 million barrels last week.
Total products supplied (DOEDTPRD) decreased 825,000 barrels a day to 18.5 million, falling for the first time in four weeks, the Energy Department reported.
“The number was bearish and should bring the price down,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York.
The U.S. is the world’s biggest oil consumer, accounting for about 21 percent of global consumption, according to BP Plc’s annual Statistical Review of World Energy. The 27 member states of the European Union accounted for 16 percent.
Oil volume in electronic trading on the Nymex was 231,836 contracts as of 2:26 p.m. in New York. Volume totaled 293,202 yesterday, 53 percent below the three-month average. Open interest was 1.33 million contracts.
Iran Threat
Iran is showing “irrational behavior” with its threat to shut the Strait of Hormuz, Victoria Nuland, a U.S. State Department spokeswoman, said today in Washington. Iranian Vice President Mohammad Reza Rahimi issued the warning in a Dec. 27 report published by the state-run Islamic Republic News Agency.
A U.S. aircraft carrier was spotted in the area where Iran is conducting naval exercises, IRNA reported today, citing navy Deputy Commander Mahmoud Mousavi. The maneuvers, announced Dec. 24, are scheduled to run through Jan. 4.
The U.S. Navy won’t tolerate a disruption to shipping in the strait, Rebecca Rebarich, a Navy spokeswoman, said yesterday in an e-mail.
“The Iranian connection in the Middle East is the powder keg,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago.
About 15.5 million barrels of oil a day, or a sixth of global consumption, passes through the Strait of Hormuz between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department.
Iran (OPCRIRAN) pumped 3.56 million barrels a day of crude in November, according to data compiled by Bloomberg, making it the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
