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Crude oil futures extend rally as markets eye Italy, IAEA report

CommoditiesNov 08, 2011 09:53AM ET
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Investing.com – Crude oil futures added to gains on Tuesday, rallying to a fresh three-month high as markets awaited the outcome a critical Italian parliamentary vote, while mounting concerns over the possibility of a supply disruption from Iran also provided support.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD96.53 a barrel during U.S. morning trade, jumping 1.05%.    

It earlier rose by as much as 1.25% to trade at USD96.86 a barrel, the highest price since August 1.

Italian Prime Minister Silvio Berlusconi’s government was to face a key vote on fiscal reforms, in what was being seen as a test of the prime minister’s majority in parliament and which would determine if he has enough support to stay in power.

Elsewhere, Greek media outlets reported earlier that Lucas Papademos will be appointed as the country’s new prime minister. Papademos is a former Bank of Greece Governor and European Central Bank Vice President.

Meanwhile, oil traders were awaiting the release of the United Nations’ International Atomic Energy Agency report tentatively scheduled to be published either on Tuesday or Wednesday.

The report is expected to show Iran's nuclear program is being geared toward military purposes, which could prompt the U.N. to impose new sanctions on Tehran, including on oil exports.

Iran is the world’s fourth largest crude oil producer and the second biggest exporter among OPEC members. The country has the capability to produce approximately 3.7 million barrels of oil a day.

German lender Commerzbank said in a report earlier that concerns over Iranian supplies “justifies a certain risk premium on the price of oil.”

Meanwhile, markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 0.5 million barrels last week, while gasoline supplies were forecast to fall by 0.4 million barrels.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery rose 1.12% to trade at USD115.84 a barrel, with the spread between the Brent and crude contracts widening to USD19.31 a barrel.

Brent prices found additional support after violence erupted in Nigeria’s oil-rich northeast region on Monday. 

Nigeria is Africa’s largest oil producer and has the capability to produce approximately 1.9 million barrels a day, according to the U.S. Energy Information Administration.


Crude oil futures extend rally as markets eye Italy, IAEA report
 

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