Brent crudetraded near the highest levelin three days before international talks withIranon its nuclear program.Chinaincreased fuel prices for the first time since September.Futures rose as much as 0.8 percent after gaining 0.5 percent on Feb. 22. Iran, which is under a Western embargo on its oil exports, will meet the U.S., China,France, Germany,Russiaand the U.K., or the so-called P5+1 group, tomorrow in Almaty,Kazakhstan, after an eight-month lapse in negotiations. The lack of a breakthrough may mean U.S. and European Union sanctions on Iran will continue to cost the Islamic republic about $98.9 million a day in lost oil sales, data compiled by Bloomberg show.
Any hopes that progress might have been made between Iran and the P5+1 at their meeting this week appear to have been dashed by provocative comments from Iranian spokesmen trumpeting advances inuranium enrichment, Nic Brown, head of commodities research at Natixis SA inLondon, said in an e-mailed response to questions today. The talks with Iran will probably be another missed opportunity, he said.
Brent for April settlement advanced as much as 95 cents to $115.05 a barrel and was at $114.99 as of 10:04 a.m. local time on the London-based ICE Futures Europe exchange. Thats the highest level since it settled at $115.60 on Feb. 20. The volume of all futures traded was 27 percent less than the 100-day average. The European benchmark crude was at a premium of $21.33 to West Texas Intermediate, up from $20.97 on Feb. 22.
Significant Producer
WTI for April delivery was at $93.64 a barrel, up 51 cents, in electronic trading on theNew York Mercantile Exchange. The contract rose to $93.13 on Feb. 22, the highest settlement since Feb. 20. Volume was 3 percent above the 100-day average. Front- month prices fell 2.9 percent last week, the most since December.
Iran is still a significant producer and any major changes one way or the other to its production has the potential to have an impact on overall global supply, said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
Atomic Weapons
The countrys revenue from oil sales has dropped because of the sanctions, PresidentMahmoud Ahmadinejadsaid in a speech aired on state television Feb. 23. The nation says its nuclear program is for civilian use, while the U.S., the EU suspect it is developing atomic weapons.
Recent discoveries of uranium resources have almost tripled Irans reserves of the radioactive fuel to 4,400 tons, theIslamic Republic News Agencyreported Feb. 23, citing Fereidoon Abbasi, the head of theAtomic Energy Organization of Iran.
The Persian Gulf nation is installing more advanced centrifuges that will multiply its uranium enrichment capability, theUnited NationsInternational Atomic Energy Agencyreported last week, adding that it was unable to conclude that all material was intended for peaceful purposes.
Theres not much sign there will be any advancement in the negotiations this week, Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said yesterday. Im not hopeful for any deal being reached in Kazakhstan. I havent seen any signs the U.S. will offer Iran any sanctions relief.
Gasoline Prices
Gasoline in China will increase by 300yuan($48) a metric ton and diesel by 290 yuan today, the National Development and Reform Commission said.
The fuel-price increase by China, the worlds second- biggest oil consumer, reflects recent international crude costs, the NDRC said in a statement on its website yesterday. Brent, the benchmark price for more than half the worlds oil, has gained 2.9 percent this year. The pump price of 90 octane, China III gasoline in Beijing will rise 3.1 percent to 10,030 yuan a ton, or $4.60 a U.S. gallon, according to NDRC data.
The average price of regular gasoline at U.S. pumps advanced 20.32 cents in the past two weeks to $3.795 a gallon, according to Lundberg Survey Inc. The survey covers the period ended Feb. 22 and is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. The average has jumped 53.71 cents this year and is 10.33 cents higher than a year earlier.
Hedge fundsand other large speculators reduced bullish crude bets for the second time in three weeks as surging U.S. output boosted supplies. Money managers cut net-long positions, orwagerson rising prices, by 6.1 percent in the seven days to Feb. 19, the Commodity Futures Trading Commissions Commitments of Traders report on Feb. 22 showed. That was the biggest drop since the week ended Dec. 11.
ICE exchange will release its data on Brent and gasoil commitments at noon London time today.
By Bloomberg
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