Oil hits fresh 11-month high above $76 on Iran
NEW YORK (Reuters) - Oil prices jumped to an 11-month high above $76 a barrel and neared a new record on Tuesday as tensions mounted between Iran and the United States and speculators kept pouring money into energy markets.
Benchmark London Brent crude settled up 62 cents at $76.40 a barrel, after trading as high as $76.63, the highest level since August 10 and closing in on the record of $78.65 a barrel.
U.S. crude settled up 62 cents at $72.81 as geopolitical tensions stoked concerns about supplies.
An Iranian newspaper quoted a senior adviser to Supreme Leader Ayatollah Ali Khamenei saying Iran was producing centrifuges for refining uranium domestically, limiting the impact of United Nations sanctions.
The United States, which believes Iran is trying to build a nuclear bomb, is sending a fresh aircraft carrier to the U.S. Navy's Fifth Fleet area of operations, which includes the Gulf, to replace one of two carriers already in the region.
"It's the Iran story -- that it is producing its centrifuges for refining uranium -- that has turned the market around on crude," Nauman Barakat, senior vice president at Macquarie Futures USA said of oil's rise.
However, some investors and analysts said the main market driver was a wave of speculative investment. Speculators boosted their net long positions in the New York Mercantile Exchange crude oil market to a record in the week to July 3, data showed.
Olivier Jakob, an analyst at Swiss-based Petromatrix, noted the continued rise in prices and open interest -- the number of contracts that have not been closed -- pointed to more investment money flowing into oil in recent days.
Citigroup analysts calculated the influx accounted for more than $10 of the price rise since the start of the year, when Brent crude was below $60 a barrel.
"Financial players have now firmly moved ahead as the main near-term driver of oil prices," Citigroup said.
The rally in oil and other commodities at the start of the third quarter has lifted the 19-contract Reuters-Jefferies CRB Index .CRB to its highest level this year.
Supply worries have also helped spur the rally -- and the Organization of Petroleum Exporting Countries shows no signs of easing output restraint. Top exporter Saudi Arabia will keep its crude supplies to European refiners steady in August, industry sources told Reuters on Tuesday.
European oil stocks data showed gasoline inventories fell 2.1 percent last month as exports to the United States bolstered lower-than-usual stocks of the motor fuel there. Industry monitor Euroilstock also reported a 1.2 percent drop in Europe's crude oil stocks in June.
On Wednesday, the U.S. Energy Information Administration will publish its latest snapshot of oil supplies in the world's top consumer. Analysts expect a build in crude stocks and a rise in gasoline and distillates.
(Additional reporting by Jiwon Chung in Singapore; Janet McBride, Jane Merriman, Peg Mackey and Santosh Menon in London)
