HardAssetsInvestor

Written by Sumit Roy  |

January 05, 2012

Crude Oil Report: Growing Iranian Rift Will Test Brent’s Key $115 Resistance

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We discuss how the intensifying Iranian nuclear row will impact the oil market.

The Department of Energy reported this morning that in the week ending Dec. 30, U.S. crude oil inventories increased by 2.2 million barrels, gasoline inventories increased by 2.5 million barrels, distillate inventories increased by 3.2 million barrels and total petroleum inventories increased by 3.4 million barrels.

Crude oil prices were little changed after the latest figures, with Brent last trading at $113.66/bbl, while WTI traded at $102.88.

Prices for crude ticked noticeably higher in recent sessions, as geopolitical fears surrounding Iran have increased. Brent is now at the highest levels since November and trading just under key $115 resistance.

Traders bid prices up in anticipation of potential supply disruptions amid the intensifying nuclear row between Iran and the international community. Iran has refused to halt its nuclear program and announced last weekend that it had successfully produced its first nuclear fuel rod, though analysts say the development is not a milestone on the path to nuclear weapons.

More significant is the latest response by the international community. The European Union has agreed in principle to halt imports of Iranian oil. Together, the countries of the EU import close to 500 Kbbl/d of oil from Iran, and they will have to secure supplies from elsewhere to compensate.