Oil Heads for Weekly Gain as Iran Tension Raises

Dec. 2 (Bloomberg) -- Oil fluctuated as it headed for its first gain in three weeks amid concern that tension between Iran and the West will intensify, threatening shipments from OPEC’s second-biggest crude producer.

Futures ranged from $99.76 to $101.56 after the U.S. Senate passed a bill aimed at Iran’s central bank yesterday and the European Union tightened sanctions. U.S. unemployment unexpectedly dropped in November to a two-year low, while employers added fewer workers than projected and earnings eased.

“Concerns about Iran are supporting the market,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The reaction to the payrolls data was an example of buy the rumor, sell the fact. We reached our high just before the numbers were released.”

Crude oil for January delivery rose 21 cents to $100.41 a barrel at 12:33 p.m. on the New York Mercantile Exchange. Futures climbed as much as $1.36 before the report’s release at 8:30 a.m. in Washington. Prices have risen 3.8 percent this week and 9.9 percent this year.

Brent oil for January settlement rose 47 cents, or 0.4 percent, to $109.46 a barrel on the London-based ICE Futures Europe exchange.

The European contract’s premium to West Texas Intermediate oil traded in New York widened 26 cents to $9.05 a barrel. The spread narrowed to $8.79 a barrel yesterday, the smallest differential since March 8.

Senate Bill

The Senate bill would give the president the power starting July 1 to bar foreign financial institutions that do business with Iran’s central bank from having correspondent bank accounts in the U.S. If enacted, it could be much harder for foreign companies to pay for oil imports from Iran. The Obama administration opposes the legislation.

Iran pumped 3.56 million barrels of oil a day last month, a Bloomberg News survey showed. Saudi Arabia is the top producer in the Organization of Petroleum Exporting Countries.

U.S. payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary-help agencies, Labor Department figures showed today in Washington.

The number of people employed rose from a revised 100,000 increase in October that was more than initially estimated. The median estimate in a Bloomberg News survey for November had called for a gain of 125,000.

“The market is accentuating the positive right now,” said Peter Beutel, the president of Cameron Hanover Inc., an energy advisory company in New Canaan, Connecticut. “Oil is moving on positive economic numbers and Middle East concerns. There are a lot of reasons to be concerned about Europe, but the market is shrugging them off.”

Debt Crisis

The European debt crisis that began in Greece has spread to Ireland, Portugal, Italy and Spain and threatens economic growth in the region.

A proposal to channel central bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($270 billion) to fight the crisis, two people familiar with the negotiations said. At a Nov. 29 meeting attended by European Central Bank President Mario Draghi, finance ministers gave the go-ahead for work on the plan, said the people, who declined to be named because the talks are at an early stage.

--Editors: Margot Habiby, Richard Stubbe

To contact the reporter on this story: Mark Shenk in New York at [email protected]

To contact the editor responsible for this story: Dan Stets at [email protected]