Oil Rises a Second Day on Sanctions Risk to Iranian Supplies
By Gavin Evans
Aug. 31 (Bloomberg) -- Crude oil rose a second day in New York after rebounding from a 10-week low yesterday on concern the United Nations next week may impose sanctions against Iran, the world's fourth-biggest oil producer.
The UN gave Iran until today to end its uranium enrichment or face economic sanctions. Senior officials from the U.S., the U.K., China, France, Russia and Germany will meet early next week to word a sanctions resolution, State Department spokesman Sean McCormack said yesterday. Oil workers in Nigeria plan a three-day strike starting on Sept. 13, Reuters reported.
``There is a fight between the high levels of inventories and the possibility of supply disruptions,'' said Andrew Harrington, industrial analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``Nothing has happened with Iran but just the possibility that it will is pushing the price around.''
Crude oil for October delivery rose as much as 60 cents, or 0.9 percent, to $70.63 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $70.49 at 8:49 a.m. in Sydney, 2.2 percent higher than a year ago.
Oil increased after yesterday falling as low as $68.65, the lowest since June 20, when an Energy Department report showed U.S. oil and gasoline stockpiles unexpectedly rose last week. The contract closed at $70.03, up 32 cents, and the first gain in three days.
``It's already apparent that Iran will refuse to stop enrichment,'' Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York said yesterday. ``It's also clear that there will be no sanctions or embargo imposed tomorrow.''
UN Process
The UN is likely to formally consider the sanctions issue ``toward the middle of September'', Agence France-Presse quoted Britain's UN Ambassador Emyr Jones Parry as saying on Aug. 29.
U.S. oil supplies jumped 2.48 million barrels to 332.8 million last week, 12 percent more than the five-year average for the period, the Energy Department reported yesterday. A 1.5 million barrel decline was expected, according to a Bloomberg News survey of 15 analysts.
Imports rose 9.4 percent to an average 11.2 million barrels a day, the second-highest ever. A cut in output earlier this month at Alaska's Prudhoe Bay field may have spurred shipments.
``Far from removing underlying concerns about spare capacity constraints and geopolitical risk, it demonstrates that the market is on high alert and determined to respond quickly to any disruption threat,'' Antoine Halff, an energy analyst with Fimat USA in New York, said yesterday. ``You want to have more oil on hand when there is the risk of a disruption.''
U.S. gasoline stockpiles rose 367,000 barrels last week to 206.2 million barrels, 2.6 percent more than average, the department said. A 600,000 barrel decline had been forecast by analysts.
To contact the reporter on this story: Gavin Evans in Wellington at
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