Crude rebounds sharply on storm fears, Iran
NEW YORK (Reuters) - Crude oil futures rebounded sharply on Monday as Tropical Storm Dolly moved into the Gulf of Mexico and after inconclusive nuclear talks between Iran and world powers over the weekend.
After a four-day losing streak on the New York Mercantile Exchange, August crude was up $2.48 or 1.92 percent at $131.36 a barrel, trading from $128.88, where it settled on Friday, to $132.05.
August crude, which expires Tuesday, racked up losses of $16.30 or 11.23 percent last week.
NYMEX crude hit a record $147.27 on July 11.
In London, September Brent crude was up $2.31 or 1.77 percent at $132.50 a barrel, trading from $13020 to $133.15.
Tropical Storm Dolly was about to emerge off the northern coast of the Yucatan Peninsula early Monday and move into the Gulf of Mexico where it could become a hurricane on Tuesday, the U.S. National Hurricane Center said in its latest report.
Weather models projected the storm would march across the southwestern Gulf and strike the South Texas coast in about three days. Some models showed a strike near the Texas border with Mexico, while others showed Dolly hitting further north along the Texas coast near Corpus Christi. Secretary of State Condoleezza Rice warned Iran on Monday that it faced more sanctions if it defied a two-week deadline to agree to curb its nuclear program.
Rice said Iran's envoy to Saturday's talks, attended by senior U.S. diplomat William Burns, engaged in small talk rather than address the central issue of the offer of six world powers at Saturday's meeting in Geneva.
"With the weekend discussions regarding Iran's nuclear program apparently resulting in another stalemate amid a two-week timeline capable of forcing fresh UN sanctions, a renewed injection of risk premium could characterize much of this week's trade," said Jim Ritterbusch, president of Ritterbusch & Associates.
At the same time, storm premium is also being added to crude oil prices, "although direct impact on oil infrastructure is expected to be limited, though there is the possibility of precautionary rig evacuations," he added.
NYMEX August RBOB was up 5.86 cents or 1.85 percent at $3.2295 a gallon, trading from $3.1807 to $3.2367. It hit a NYMEX record of $3.6310 on July 11.
August heating oil was up 7.04 cents or 1.91 percent at $3.7619 a gallon, trading from $3.7020 to $3.7710. The contract hit a record $4.1586 on July 11.
The heating oil crack spread was at $26.64 after ending at $26.16 on Friday. The RBOB crack spread was at $4.28, after ending at $4.30 on Friday.
(Reporting by Gene Ramos; Editing by John Picinich)
