London: Oil held above $107 a barrel on Thursday as investors looked ahead to a US supply report expected to show a drop in crude stocks and as Iranian threats to halt a vital oil trade lent support.
A report from the US government’s Energy Information Administration (EIA) is expected to show crude stocks fell 1.7 million barrels. Wednesday’s report from industry group the American Petroleum Institute said they rose by 9.6 million barrels, which weighed on prices overnight.
Brent crude rose 4 cents to $107.60 a barrel by 03:00 pm after falling nearly $2 the day before. Wednesday’s decline snapped a string of six straight sessions of gains. US crude climbed 5 cents to $99.41.
“Worries over Iran are supportive. The market is up even though the API stats were bearish, so people may be waiting for the EIA,” said Christopher Bellew, an oil broker at Jefferies Bache.
A weaker euro limited the rise in prices. The euro slid to the lowest in nearly a year versus the dollar on Thursday, having suffered a sudden drop the previous day as moves were amplified in poor year-end liquidity.
Gains in the dollar can pressure dollar-denominated commodities by making them more expensive to consumers using other currencies.
“A big increase in US crude oil stocks and the falling euro against the dollar are the main pressure points for the market at the moment,” said Ken Hasegawa, a derivatives manager with brokerage Newedge in Tokyo.
Brent is still on track to post a 13% gain in 2011, supported by the virtual shutdown of Libya’s oil exports for much of the year, after a nearly 22% rise in 2010.
With Libyan output and exports now recovering, investors’ concern over oil supplies has shifted to Iran, the world’s third-largest oil exporter in 2010, according to the EIA.
Iran, at odds with the West over its nuclear programme, said on Tuesday it would stop the flow of oil through the Strait of Hormuz if sanctions were imposed on its crude exports.
The US Fifth Fleet, which patrols the seas of the Middle East and Central Asia, said it would not allow any disruption to seaborne traffic in the area.