BLBG: Oil Rises a Second Day as U.S., U.K. Condemn Iran Missile Test
By Margot Habiby
Dec. 16 (Bloomberg) -- Crude oil rose for a second day as Iran successfully tested a medium-range missile, drawing threats of sanctions against OPEC’s second-largest oil producer.
Oil extended earlier gains after the Obama administration said Iran’s test of the upgraded Sejil-2 surface-to-surface missile undermines the country’s claim of peaceful intentions. U.K. Prime Minister Gordon Brown said the move “does make the case for us moving further on sanctions.”
“This geopolitical calculation is going to re-emerge as we head into the new year,” said John Kilduff, a partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy-commodity investments. Developments in the Middle East and North Korea “argue that the security premium is coming back into the price of oil.”
Crude oil for January delivery rose 93 cents, or 1.3 percent, to $71.62 a barrel at 10:09 a.m. on the New York Mercantile Exchange. Earlier, futures touched $71.82, the highest since Dec. 9. Oil has climbed 61 percent this year.
Oil also increased before a report estimated to show that U.S. crude inventories declined last week.
Stockpiles probably declined by 2 million barrels in the week ended Dec. 11, from 336.1 million the prior week, according to the median of 17 estimates. The Energy Department is scheduled to release its weekly inventory report at 10:30 a.m. in Washington.
The American Petroleum Institute reported yesterday crude oil inventories rose 924,000 barrels last week to 332.5 million. Gasoline stocks climbed 2.07 million barrels to 217 million, the highest since April, according to the API.
Housing Starts
U.S. housing starts rose 8.9 percent in November, in a sign of a continuing economic recovery that may boost energy demand.
January crude oil options expire at the close of floor trading on the Nymex today, which may cause the market to be more volatile than usual, Samples said.
The January contract for Brent crude oil on the London- based ICE Futures Europe exchange also expires today. Brent for January settlement rose $1.08, or 1.5 percent, to $73.13 a barrel. The more widely traded February contract gained $1.06, or 1.5 percent, to $73.93 a barrel.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
