LONDON, Feb 3 — Brent crude rose above US$112 (RM338.24) today after Iran’s supreme leader warned of retaliation over an oil embargo “at the right time”, although caution before the latest US jobs data and worries about the euro zone kept gains in check.
Ayatollah Ali Khamenei, in a defiant speech to mark the anniversary of the 1979 Islamic Revolution, said Tehran would not yield to international pressure to abandon its nuclear programme.
“Sanctions will not have any impact on our determination to continue our nuclear course ... In response to threats of oil embargo and war, we have our own threats to impose at the right time,” Khamenei told worshippers in a live broadcast on state television.
By 1206 GMT, front-month Brent crude was up 26 cents at US$112.33 a barrel, gaining for a fourth consecutive day. US crude rose by 17 cents to US$96.53 a barrel, reversing five straight sessions of losses.
“This news flow should continue to build a Brent premium, and could widen the Brent-WTI (US crude) spread,” Commerzbank oil analyst Carsten Fritsch said.
The spread between the two benchmark crudes stood at US$15.77 a barrel by the same time, having widened the previous session to above US$16.
The Washington Post reported that U.S. Defense Secretary Leon Panetta was concerned about the increased likelihood that Israel could launch an attack as early as April. CNN said it confirmed the report, citing a senior Obama administration official, who declined to be identified.
“The view and talk has helped to slowly support the growing risk premium that has been in the market and ... is acting as a price floor at a minimum,” Dominick Chirichella from Energy Management Institute said in a note.
Oil gains were capped, however, ahead of key US jobs data and as Greece continued negotiating towards a deal with its creditors.
Investors will scrutinise the US employment report, mindful that an expected slowdown in first-quarter US economic growth could affect oil demand from the world’s top consumer.
“The markets are setting up for a macro-driven trading session at least for the first part of the US session as all await the latest non-farm payroll number from the US Labour Department, along with the headline unemployment rate,” Chirichella added.
Demand outlook
US non-farm payrolls were forecast to rise by 150,000 jobs after a 200,000 increase in December, according to a Reuters survey, with the unemployment rate seen static at 8.5 per cent.
“The jobless figures could have an impact on oil prices depending on outcome via risk appetite, but these numbers are notoriously volatile, so there is room for heightened volatility in the afternoon,” Fritsch said.
While job growth has quickened, US employment remains about 6.1 million below its pre-recession level. There are no jobs for three out of every four unemployed people, and 23.7 million Americans are either out of work or underemployed.
In China, the world’s second-largest oil consumer, net crude oil imports are expected to rise 5.9 per cent this year, the slowest growth rate since 2006, as a slack export market cuts into consumption, local media reported today, citing a report by top oil firm China National Petroleum Corp.
Net crude imports are estimated at 266 million tonnes, or 5.32 million barrels per day (bpd), in 2012 versus 251.26 million tonnes (5.03 million bpd) last year, according to the report in the Beijing Times.
Oil investors remained worried about that Europe’s debt crisis could worsen and hurt the global economy. Retail sales in the euro zone tumbled unexpectedly in December, the biggest drop in the Christmas period in three years, with rising joblessness and stubborn inflation undercutting signs of stabilisation.
The euro zone’s finance ministers aim to agree on a second financing package for Greece on Monday and help contain the two-year old crisis. — Reuters
