February 6, 2012 / 3:41 AM / 6 years ago

Brent jumps to 6-month high on Europe cold snap

NEW YORK (Reuters) - Brent oil rose for a fifth straight session on Monday to settle at a six-month high as cold weather in Europe boosted heating fuel demand and pushed the crude’s premium to U.S. oil to the highest since November.

European gasoil led gains across the oil complex, rising more than 3.5 percent as bitter weather killed another 33 people in Europe. [ID:nL5E8D636D].

Italy announced it would allow electricity providers to fire up oil-fueled generators to limit natural gas after six-straight days of reduced supplies from Russia.

Additional support for Brent came amid supply concerns from OPEC members Iran and Nigeria.

“The cold weather is giving us a lift in the products and that is feeding through to Brent,” said Rob Montefusco, a trader at Sucden Financial in London. “Also, any sort of trouble in the Middle East is likely to keep Brent well bid.”

U.S. crude fell, however, dragged down by concerns about weak consumption and rising inventories that increased the contract’s discount to Brent to more than $19 a barrel from more than $2, the largest discount since November.

Traders said the premium could blow out levels eclipsing those seen last year over $28 a barrel as Midwest refinery turnarounds and rising pipeline flows boost inventories in the region, home to the Cushing, Oklahoma, delivery point to the New York Mercantile Exchange’s oil futures contract.

Brent March crude rose $1.35 to settle at $115.93 a barrel, highest close since August 2. Monday’s trade ranged from $113.65 to $116.22. The $116.22 was the highest since $116.48 intraday on November 8.

U.S. March crude fell 93 cents to settle at $96.91 a barrel, having slumped as low as $96.38.

Heating oil prices traded up nearly 2.3 percent in late activity, despite forecasts that U.S. total heating demand would run about 14.5 percent below normal and heating oil demand would be 20.5 percent below normal.

Trading volumes were heavy, with Brent volume about 22 percent above the 30-day moving average and U.S. crude about 18 percent over that average.

The euro weakened against the dollar after the failure of Greek coalition parties to approve the terms of a new bailout package rekindled worries about a chaotic default. <USD/>

The dollar index .DXY edged up and a stronger U.S. currency can pressure dollar-denominated oil by making the commodity more expensive for consumers using other currencies.


China’s Iran oil imports:


For a 24-hr technical outlook on Brent:


For a 24-hr technical outlook on WTI:


Crude imports, exposure to Iran:




Traders also eyed developments in the Middle East and Nigeria, where a police station was the site of the latest attack by suspected Islamist militants.

Iran’s Revolutionary Guards deputy commander said on Sunday that Tehran would target any country used as a launching pad for attacks against its soil. Iran’s supreme leader last week threatened reprisals for the West’s ban on Iranian oil exports in the standoff over Tehran’s nuclear program.

China, the largest consumer of Iranian crude, will halve its crude oil imports from Iran in March versus year-ago levels as a dispute over payments and prices stretches into a third month, oil industry sources involved in the deals said.

Asia’s imports of West African crude are at record highs as sanctions on Iran reduce supplies, a Reuters survey of West African flows suggest.

In Syria an explosion ripped through an oil pipeline feeding a main refinery in the city of Homs, the second in a week to hit the pipeline.

Additional reporting by Gene Ramos in New York, Claire Milhench in London and Francis Kan in Singapore. Editing by Bob Burgdorfer.

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