OIL & GAS MARKET WRAP

The Oil and Gas wrap provides the latest oil prices from commodity exchanges in New York and London, gives a summary of the main corporate and macroeconomic news impacting the price of oil, a barometer of the strength of global economy.

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Friday, January 27, 2012

Oil prices surge after Iran prepares to cut off oil supplies to Europe

Oil prices surge after Iran prepares to cut off oil supplies to Europe

Oil prices surged this afternoon as concerns that Iran may halt oil exports to Europe as soon as next week outweighed today’s weaker than expected US GDP figures.

The data from the Commerce Department showed that the US economy expanded at a rate of 2.8 percent in the fourth quarter of 2011, while analysts expected to see an increase of up to 3.5 percent.

The GDP growth seen in the final three months of 2011 is still considerably stronger than the 1.8 percent expansion in the third quarter.

The negative impact from the GDP report was partly offset by a better than expected reading of the University of Michigan consumer confidence index.

The gauge rose from 69.9 last month to 75, while analysts polled by Bloomberg expected to see no change from the previous reading of 74.

Despite the upbeat consumer sentiment data, equity markets in Europe and the US failed to recover.

However, oil prices, which enjoyed a strong surge early in the session, held steady thanks to Iran’s threats to cut off exports to Europe immediately.

On Sunday, the Iranian parliament will discuss stopping oil exports to the Europe in response to the oil embargo agreed by the EU on Monday.

The plan was to gradually reduce dependence on crude imports from Iran, which is accused of illegally developing a nuclear weapon, to minimise the impact of the embargo on oil prices.

Europe is expected to stop importing oil from the Middle Eastern country by July this year.

However, if the Iranian parliament approves the bill, Europe will have to urgently seek new suppliers to make up for the 600,000 barrels of oil per day currently imported from Iran.

US light, sweet crude for March delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose 58 cents to US$100.28/barrel in morning trade in New York.

March Brent crude added 70 cents to trade at US$111.57/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Enegi Oil (LON:ENEG), up 13 percent at 15.8 pence at midday

Lochard Energy (LON:LHD), up 12.5 percent at 9.12 pence

Frontera Resources (LON:FRR), up 10.5 percent at 1.35 pence

Argos Resources (LON:ARG), up 9 percent at 21.53 pence

Matra Petroleum (LON:MTA), up 7.5 percent at 0.806 pence

The top fallers were:

Petrel Resources (LON:PET), down 11 percent at 9.55 pence at midday

Woburn Energy (LON:WBN), down 11 percent at 2 pence

Leni Gas & Oil (LON:LGO), down 5.5 percent at 1.29 pence

Europa Oil & Gas (LON:EOG), down 5 percent at 8.65 pence

PetroLatina (LON:PELE), down 5 percent at 16.25 pence


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