Crude Oil Rises a Second Day as Iran Protests

Bloomberg, Oil gained for a second day in New York, rising from the highest close in 29 months, as protests in Iran stoked concern the turmoil spreading across the Middle East may disrupt supplies from OPEC’s second-largest producer.

Futures gained as much as 1 percent after demonstrators clashed with security forces in Tehran yesterday. Iran pumped 3.7 million barrels a day in February, according to Bloomberg estimates. Saudi Arabia’s benchmark stock index plunged the most in two years yesterday on concern disturbances may extend to the kingdom, the biggest supplier in the Organization of Petroleum Exporting Countries. Libyan rebels braced for renewed clashes with forces loyal to leader Muammar Qaddafi.

“Given the speed at which events are unfolding, we do not rule out a further spike of $10 a barrel or beyond in the coming weeks,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e-mailed note today. “The unrest is threatening to spread to Iran.”

Oil for April delivery gained as much as $1.01 to $100.64 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.78 at 3:47 p.m. Singapore time. Yesterday, the contract rose 2.7 percent to $99.63, the highest since close September 2008. Prices are 25 percent higher compared with a year ago.

Brent crude for April settlement was at $115.25 a barrel, down 17 cents, on the London-based ICE Futures Europe exchange. Yesterday, it climbed $3.62, or 3.2 percent, to $115.42, the highest settlement since Aug. 27, 2008.
Price Decline

Fighting in Libya may have shut as much as 850,000 barrels a day of the country’s output, according to the International Energy Agency.

Saudi Arabian Oil Co.’s Chief Executive Officer Khalid Al- Falih this week said the kingdom is “ready to supply incremental change in demand,” to cover any shortfall from Libya. Saudi Arabia pumped 8.43 million barrels a day of oil in February, according to estimates compiled by Bloomberg.

Prices will probably decline to below $100 a barrel as Saudi Arabia releases supply from its reserves and demand drops from elevated December levels, Andrew Garthwaite, an analyst at Credit Suisse Group AG, said in a note dated today. The rise in prices is “manageable,” he said.

Nigeria, a favored supplier of oil to U.S. refiners, will increase its daily crude exports of 14 main grades by 9.3 percent in April from this month, according to loading programs obtained by Bloomberg News.
Middle East Riots

Riots from Morocco to Bahrain have already toppled leaders in Tunisia and Egypt and there have been protests in Yemen, to the south of Saudi Arabia, the world’s biggest oil producer. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and 20, according to Human Rights Watch.

Iran’s Foreign Ministry said issues related to opposition figures in the country are “internal affairs,” without commenting on allegations by dissidents that authorities had detained the main opposition leaders Mehdi Karrubi and Mir- Hossein Mousavi

In Oman, the largest Middle Eastern producer outside of OPEC, protesters blocked a highway linking the northern city of Sohar to the capital Muscat yesterday as the army set up checkpoints around Sohar and inspected vehicles. The country pumped 885,600 barrels of oil a day in January, according to data reported by the state-run Oman News Agency.
Gasoline Rises

Crude’s gains are inflating the cost of oil products such as gasoline. Motor fuel for April delivery advanced as much as 2.94 cents, or 1 percent, to $3.0128 a gallon on the New York Mercantile Exchange. Yesterday, it climbed 9.07 cents to settle at $2.9834, the highest since August 2008.

Oil also rose as manufacturing in the U.S. grew in February at the fastest rate since May 2004. The Institute for Supply Management’s factory index increased to 61.4, exceeding the median forecast of economists surveyed by Bloomberg News, the Tempe, Arizona-based group said yesterday. Readings greater than 50 signal growth.

Federal Reserve Chairman Ben S. Bernanke said the surge in oil and other commodity prices probably won’t cause a permanent increase in broader inflation, in his semi-annual monetary policy testimony before the Senate Banking Committee.

U.S. crude oil supplies fell 1.1 million barrels last week, according to the industry-funded American Petroleum Institute. An Energy Department report today may show inventories rose 750,000 barrels last week from 346.7 million barrels, according to the median of 17 analyst estimates in a Bloomberg News survey. It would be the seventh week of gains.