Singapore: Brent crude traded above $110 for the third session on Thursday after the world’s major central banks moved to tame a liquidity crunch for European banks, but concerns about slower demand capped prices and offset any gains due to Iran.
“The pressure on Brent is the weak economy in Europe. We are not sure if we are going to see significant growth in oil demand. It could be remain flat for a few years,” said Tony Regan, analyst at Tri-Zen Capital in Singapore.
Brent crude edged up 5 cents to $110.57 by 8:50am, after hitting an intra-day high of $110.75. US crude in were up 27 cents to $100.63 a barrel.
Despite the collective efforts of the world’s central banks to stabilise global markets, some oil investors are still concerned that the euro zone debt crisis will take a long time to be resolved.
Euro zone leaders have so far failed to restore confidence and some analysts now see a 9 December Brussels summit as a make-or-break moment for the euro.
The euro zone’s woes may have temporarily overshadowed the effect of Iran’s escalating tensions with the West and the threat of further sanctions.
Tuesday’s attack on the British embassy in Tehran by dozens of students and protesters angry over Britain’s unilateral sanctions could provide extra ammunition to European governments pushing for stronger sanctions against Iran, in particular a contentious embargo on Iranian oil, diplomats said on Wednesday.
“You’ve got some pretty bullish news out there and Brent failed to rally at the back of it. What’s the game?”, said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
“Every time when there’s a problem in Iran, you don’t see the prices coming off. They should go up 5-10%. But once the market realises that prices are cheap enough and decides to take it on, prices will go up.”
Separately, US crude oil and product stocks rose last week as crude imports increased and refineries scaled back their processing rates, US Energy Information Administration data showed on Wednesday.
Crude inventories rose 3.93 million barrels to 334.75 million barrels in the week to 25 November, while analysts polled by Reuters had projected a 200,000 barrel drawdown, on average.