Iran's oil exports have fallen by an estimated 40% since the start of the year
Reuters / London Jun 13, 2012, 15:27 IST
Reuters / London Jun 13, 2012, 15:27 IST
Brent
crude oil held firm on Wednesday, with investors awaiting the outcome
of the meeting this week of the producer group OPEC, while gains were
capped by worries about Europe's debt crisis and prospects for oil
demand.
Iran's oil exports have fallen by an estimated 40% since the start of
the year as Western sanctions tear into the country's vital oil
industry, the International Energy Agency said on Wednesday.
Brent crude gained 2 cents to $97.16 a barrel by 2:30 pm. It had slipped to as low as $96.67 earlier in the session. US crude fell eight cents $83.24 per barrel.
The IEA report was seen as effectively calling on OPEC to maintain
current high oil output levels to help ailing Western economies
struggling with high energy prices.
However, the report left the market little moved.
"The IEA confirmed that there are stock builds and they don't want to
say that the market is over-supplied, but it's not a game-changer in
terms of prices and the market is still well-supplied," Olivier Jakob at
Petromatrix in Zug said.
He added that a focus on Greek parliamentary elections at the weekend would likely drive further volatility.
Investors are watching for any change in the Organization of the
Petroleum Exporting Countries' output policy, with price hawks calling
on Saudi Arabia to rein in excess production.
OPEC and the U.S. government agreed on Tuesday that global oil
markets could weaken further in the second half of the year, with
prospects for demand dimming.
In another bearish signal for oil prices, the U.S. Energy Information
Administration in its monthly report on market fundamentals cut its
forecast for oil demand growth this year by 150,000 barrels per day to
810,000 bpd as the European crisis weighs on demand.
Brent has fallen from a peak of more than $128 a barrel in March,
prompting calls from exporters such as Venezuela to stem a slide that
has knocked $30 a barrel off prices.
Saudi Arabia has lifted output to 10 million barrels a day, its
highest in decades, to help nurse global economic growth in what Saudi
Oil Minister Ali al-Naimi has called a "type of stimulus" for the
economy.
That has taken supply from the Organization of the Petroleum
Exporting Countries to 31.6 million barrels a day in May, an OPEC report
said on Tuesday, well above the official 30-million bpd target it set
in December.
Greece, US Data watched
The Greek elections over the weekend, which may determine whether the
country stays in the euro zone, are also weighing on crude prices as
further chaos in the single currency region may affect global demand for
oil.
Raising the stakes further, the UK's finance minister said Europe may
need to sacrifice Greece's membership of its single currency bloc, and
Austria's finance minister said Italy might need a financial rescue
because of its high borrowing costs.
While the Austrian's comment drew a sharp denial from the Italian
prime minister, it stoked fears that Europe is far from ending 2-1/2
years of turmoil.
Data on crude stockpiles in the world's top oil consumer, the United
States due at 1430 GMT, will also be watched for clues on how well
supplied the market is.
U.S. crude stocks climbed unexpectedly last week thanks to a large
increase on the West Coast, although stockpiles in the key Cushing
storage hub declined, data from the American Petroleum Institute (API)
showed on Wednesday.
Crude inventories rose by 1.6 million barrels, contrary to analysts'
expectations in a Reuters poll for a draw of 1.4 million. The EIA
numbers are due later in the day.
