Oil has rose to the highest level in more than nine months after it was reported that the euro zone will be bailing out Greece. Iran has also reported that they have stopped selling oil to France and Britain. Iran sanctions are making it extremely difficult for them to sell oil, which has also been a big deal.
By Moming Zhou
Feb 21, 2012 10:43 AM MT
Oil rose to the highest level in more than nine months after euro-area finance ministers agreed on a second bailout for Greece and Iran said it stopped selling oil to France and Britain.
Prices gained as much as 2.1 percent after the ministers awarded 130 billion euros ($173 billion) in aid, wrung concessions from Greece’s private investors and engineered a profit transfer by the European Central Bank. Iran stopped selling oil to the two countries yesterday to preempt a European Union ban, according to an official news website.
“We have some buying based on Europe having resolved the Greek situation,” said Peter Beutel, president of trading advisory company Cameronhanover.com in New Canaan, Connecticut. “We seem to have some optimism here that the European economy is going to get stronger and demand will be stronger. There are also fears over what’s going on with Iran.”
Oil for March delivery gained $1.61, or 1.6 percent, to $104.85 a barrel at 12:40 p.m. on the New York Mercantile Exchange after climbing to $105.44, the highest intraday price since May 5. Futures have risen 6.1 percent this year. The March contract expires at the close of floor trading today.
The more actively traded April contract increased $1.56, or 1.5 percent, to $105.16 on the Nymex. Floor trading was closed yesterday because of the U.S. Presidents Day holiday.
Brent oil for April settlement rose 52 cents, or 0.4 percent, to $120.57 a barrel on the ICE Futures Europe exchange in London.
Greece will enjoy an economic rebound now that European finance ministers have approved the rescue package, said IIF managing director Charles Dallara in a Bloomberg Television interview in Brussels.
“The Greece news is part of what rallied the market,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “The market is up after the Iranians cut off supplies to some European countries. We are still sitting on the higher end of the range.”
Brent touched $121.15 yesterday, the highest level June 15, following Iran’s announcement of the oil export halt. The European Union on Jan. 23 agreed to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
Iran “will give its crude oil to new customers instead of French and U.K. companies,” the Shana oil ministry news website reported yesterday, citing Alireza Nikzad Rahbar, a ministry spokesman.
The Iranian decision will have “no impact on Britain’s energy security or supplies,” U.K. Foreign Secretary William Hague said yesterday.
EU nations bought a combined 18 percent of Iran’s exports of crude and condensates, or 452,000 barrels a day, in the first half of 2011, according to the Energy Department. France purchased 49,000 barrels a day and the U.K. 11,000 barrels.
“The sanctions are making it increasingly difficult for Iran to sell oil,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “You are effectively taking Iran out of the global market, to some extent, and that’s a big deal.”
Oil also gained as U.S. equities rose. The Dow Jones Industrial Average topped the 13,000 level for the first time since May 2008, and the Standard & Poor’s 500 Index traded above the highest close since 2008.
Hedge funds and other money managers raised wagers on advancing oil prices by 14 percent in the week ended Feb. 14 to 233,889, according to the Commodity Futures Trading Commission’s Commitments of Traders report. It was the highest level since May 10.
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