 "Oil moves up $119 on supply concerns")
Oil rose to $119 a barrel on Friday, trimming its weekly decline, as the impact of sanctions on Iranian supply countered nervousness about the eurozone debt crisis and the strength of global growth.
Oil buyers in Japan and Europe are cutting purchases of Iranian crude in April, industry sources said this week, adding to signs Western sanctions are curbing sales from the major oil exporter.
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Brent crude gained $1.01 to $119.01 a barrel by 1056 GMT, rebounding from a low of $116.70 reached on Wednesday. US crude added 79 cents to $103.06 and was heading for a weekly gain.
“I think we’ve marked the bottom of this downward move,” said Christopher Bellew, a broker at Jefferies Bache in London. Support for Brent is coming from “the impact of sanctions on Iran and probably, once refineries come out of turnaround, quite a tight supply situation,” he said.
The North Sea crude market, which underpins Brent futures, has come under pressure this week as maintenance at refineries curbed demand. Brent’s weekly decline was earlier on Friday on track to be the steepest in absolute terms since mid-January.
A Spanish bond sale on Thursday failed to ease concerns about the sustainability of the country’s debt, while a US employment report suggested a slowdown in job creation, dimming the outlook for oil demand.
“The Spain sovereign debt auction went rather well, but the European economy is still very unstable which is affecting Brent prices,” said Yusuke Seta, a Tokyo-based broker at Newedge.
According to Reuters polls on Thursday, the global economy is set to expand by 3.3 percent this year, slower than the International Monetary Fund’s 3.5 percent growth estimate.
Concern about possible supply shortages as Western sanctions target exports from Iran helped to send Brent to above $128 a barrel in March, the highest since 2008.
Helping to allay those concerns, top world exporter Saudi Arabia is pumping crude at the highest rate in decades and its Oil Minister Ali al-Naimi said on April 13 the kingdom was “determined” to see a lower oil price.
Talks between world powers and Iran over its nuclear programme have also eased the upward pressure on prices. A second round of discussions is scheduled to take place in Baghdad on May 23.
U.S. crude remained supported on expectations that an oil glut in the US Midwest would ease with an earlier-than-scheduled plan to reverse the flow of the Seaway crude pipeline.
Brent’s premium to US crude was trading above $15 on Friday, having weakened from almost $22 on 5 April.
Reuters
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