Oil Prices Gain On Global Supply Threats
West Texas Intermediate (WTI) light sweet crude oil for February delivery was rising 18 cents to $99.28 a barrel. At the same time, the European Brent crude contract for March delivery was down 10 cents to $110.95.
Some improved European headlines, namely successful European bond auctions this week, were providing oil prices with a bit of support Friday morning.
WTI prices remained below $100 Friday after a late-afternoon decline the previous session on news that the European Union may require an additional six months to reach a final decision on imposing an embargo on Iranian oil imports, giving member countries such as Spain, Italy and Greece time to find alternative crude suppliers.
The news was a disappointment to oil bulls who were pinning their hopes on a full-on embargo, which would have likely led to supply bottlenecks, with various Asian countries also under pressure to find alternative sources of oil.
Easing concerns over Nigerian oil supply was also keeping a lid on prices, as a leading representative of Nigerian unions said that talks with President Goodluck Jonathan over the removal of fuel subsidies were going well. Petrol prices have skyrocketed since their removal, spurring strikes that threatened to seriously hamper oil production in this top oil-exporting region of Africa.
Demand concerns were also stifling oil prices, with the Organization for Economic Cooperation and Development saying the previous day that economic conditions in most major economies continued to worsen in November. The data also pointed to a likely slowdown in economic activity in Brazil, India and Europe during the first half of 2012. However, the U.S., Japan, Russia and potentially China was likely to suffer the least.
“Slower growth, in particular in Europe and some emerging economies, will weigh on global oil demand, which we expect to expand by a mere 0.6 million barrels a day this year,” say JBC Energy analysts.
Energy stocks were trading sideways or lower in premarket trading Friday. BP(BP_) was falling 1% to $43.74; Chevron(CVX_) was down 0.2% to $104.77; Exxon(XOM_) was down 0.2% to $84.57; Occidental Petroleum(OXY_) was flat at $97.82; Halliburton(HAL_) was flat at $34.71; Baker Hughes(BHI_) was flat at $48.27; and National-Oilwell Varco(NOV_) was trading sideways at $73.25.