Brent oil price hits five-month peak

7th February 2013, Comments 0 comments

Brent oil hit a five-month high on Thursday, driven mostly by geopolitical fears over Iran, but New York crude fell back as traders eyed and the stronger dollar and falling equities.

Brent North Sea crude for March delivery jumped to $117.83 a barrel -- the highest level since September 14. In later London afternoon deals, the contract stood at $117.06, a rise of 33 cents from Wednesday's closing level.

New York's main contract, light sweet crude for March fell 69 cents to $95.93 per barrel, erasing earlier gains as the dollar rose against the euro after cautious remarks from European Central Bank chief Mario Draghi.

The market had finished flat on Wednesday but rebounded from initial losses following news of stepped-up US sanctions on key oil producing nation Iran.

Brent prices continued to garner support on Thursday from Iran tensions and brighter prospects for global energy demand, dealers said.

"The high cost of oil reflects hopes of a strong recovery in demand at least as much as tensions in the Middle East," said Capital Economics analyst Tom Pugh, who estimated that tensions added a $10-15 premium for Brent.

He added: "Further US sanctions implemented yesterday should increase the pressure on Tehran to make a deal with the West.

"However, Iran's increasing ability to evade sanctions, elections for the Iranian Presidency in June, and today's rejection of talks with the US by Iran's supreme leader, may all delay any agreement until the second half of the year."

The US Treasury Department announced new sanctions targeting Iranian oil revenue on Wednesday. Under the plan, Tehran is denied direct access to the money from its oil sales to other countries.

Meanwhile, investors will also be on the lookout for key trade and inflation data from China due to be released Friday.

The closely-watched figures are the latest in a string of data expected to point to a recovery in the world's second biggest economy.

China is the world's biggest energy consumer and a strong economy bodes well for demand and prices.

© 2013 AFP

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