Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
[The Daily Star via Bloomberg]
Oil hovered close to a 30-month high as civil unrest in Iran heightened concern about potential supply disruptions in OPEC’s third-biggest crude producer. Futures held above $60 a barrel in New York. In Iran, the death toll mounted amid some of the most violent clashes in years between security forces and protesters. The country pumps about 3.8 million barrels a day. Last week’s 3.3 percent advance in the U.S. oil benchmark capped a 12 percent gain for 2017 as OPEC, Russia and other major suppliers cooperated to curb a worldwide glut.
“There’s not a lot of bearish news out there right now,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The market is going to settle in” around $60 and likely move higher.
Oil rose in New York last year as the Organization of Petroleum Exporting Countries and its allies trimmed supplies. U.S. crude output has also slipped from a record high, with weekly production falling through Dec. 22 for the first time since mid-October. Any interruption to Iranian supply would be a significant shock to the market.
West Texas Intermediate for February delivery was down 5 cents to $60.37 a barrel at 10:11 a.m. on the New York Mercantile Exchange. In earlier trading, the contract touched $60.74, the highest intraday level since June 2015.
Brent for March settlement fell 20 cents to $66.67 on the London-based ICE Futures Europe exchange, and traded at a premium of $6.26 to WTI for the same month. The global benchmark crude rose about 18 percent last year for a second annual increase.
Though the Iranian unrest that began Thursday in the northeastern city of Mashhad initially targeted the government’s handling of the economy, the focus expanded within a day to the religious establishment and state security forces. As many as a dozen people may have died.
“I would not be surprised if any outcome of the current crisis would be ultimately negative for the oil price,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “Should the protests lead to regime change, it might attract massive new investments and result in higher output.”
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