LONDON: Threats to supply in Iran and Kazakhstan and stronger economic data lifted oil by nearly $2 on Tuesday, outweighing rumbling concerns on the euro zone debt crisis.
Brent crude was $1.70 higher at $105.34 a barrel by 1307 GMT, after touching the day’s high of $105.58. However it is still down nearly 5 percent this month. US crude was up $1.27 at $95.15 a barrel.
Hundreds of oil workers held a third day of protests in the capital of Kazakhstan’s western oil-producing region on Monday after at least 15 people were killed in the state’s deadliest riots in decades.
The country’s crude production is estimated at around 1.6 million barrels per day, similar to Libya’s before its civil war.
"Kazakhstan is important as it was hardly on the list before, it adds to supply worries and into the bullish market," said Andy Sommer, at GEL at Dietikon in Switzerland.
There were renewed concerns over supplies from Iran, after the OPEC member said crude production had dropped due to lack of investment in oil fields as the country faces the West’s toughest ever sanctions over its nuclear program.
Traders and brokers were bullish on the prospects for the oil price in the run up to the end of the year.
"Crude stocks are falling in the United States and there is reasonable economic growth there and there are the unknowns about potential cold weather and problems in Iran and Syria," said Christopher Bellew, oil broker at Jefferies Bache said.
"There’s every reason to expect prices to move higher to year end and I’d expect to see (Brent) trading at $110 next week."
The Islamic Republic is also struggling with crude sales with top buyer China slashing volumes by about half for January of typical imports as the two haggle over terms.
"It appears increasingly likely that Iran may need to turn to floating storage — effectively reducing its near-term crude supply — as it has at times in the past when it has had difficulty placing crude," JPMorgan analysts said in a report.
"Iran followed Saudi Arabia’s lead in raising OSPs to record levels for January loadings, and given potential payment and political difficulties associated with purchasing Iranian crude, it is unsurprising that some buyers are searching for alternatives."
Market participants were also watching developments in OPEC producer Iraq after the departure of US forces. Iraq issued an arrest warrant for Sunni Vice President Tareq Al-Hashemi, after the government obtained confessions linking him to what the official called terrorist activities.
Gains were capped by ongoing concerns that the euro zone debt crisis could tip the global economy into a recession. A plan to boost crisis funds parked with the IMF failed to reach a $200 billion hoped-for target.
However data from Germany showing rising business sentiment followed fresh signs of US economic growth accelerating with data on Monday pointing to a potential recovery in the beleaguered US housing market next year.
Ahead of weekly inventory reports, US crude stocks were expected to have fallen last week, with distillate stockpiles slightly lower and gasoline stockpiles up, a Reuters survey of analysts showed. —Additional reporting by Manash Goswami and Francis Kan in Singapore
