NEW YORK (Reuters) - Brent crude prices rose on Monday to a more than seven-week peak on elevated concerns about Iran’s nuclear program and on hopes that a new Greek government will allow Europe to contain its debt crisis.
Brent gained more than its U.S. counterpart despite U.S. crude closing at a 14-week high.
Brent’s premium to U.S. crude rose above $19 a barrel, continuing to recover from its recent $15.94 low on October 31.
Iran’s dispute with the West over Tehran’s controversial nuclear program intensified ahead of a report from the U.N.’s International Atomic Energy Agency that is expected to show Iran’s program is being geared toward making weapons.
Russia’s foreign minister warned that any military strike against Iran would be a grave mistake with unpredictable consequences, while the White House said it expects the U.N. report to echo U.S. concerns about the direction of Iran’s nuclear program.
“The Iran situation is raising oil, especially Brent, because the (U.N.‘s) IAEA is expected to come out with evidence that is pretty damning,” said Bill O‘Grady, chief market strategist at Confluence Investment Management in St. Louis.
After last week’s political crisis, Greece was working to put new leadership in place and push through a bailout agreement, though the bond crisis looked set to engulf its next target, the much larger Italy.
ICE Brent December crude rose $2.59 to settle at $114.56 a barrel, reaching $115.23 in post-settlement trading, the highest intraday price since September 15.
U.S. December crude rose $1.26 to settle at $95.52 a barrel, the highest close since July 29 and above the front-month 200-day moving average of $94.88. Prices reached $96.11 in post-settlement trading.
The volatile trading was enabled by low volumes. Both Brent and U.S. trading volumes were below their 30-day averages.
Speculators raised their net long positions in Brent futures and options in the week to November 1 after cutting them the previous week, IntercontinentalExchange (ICE) data released on Monday showed.
U.S. gasoline and heating oil futures posted better percentage gains than U.S. crude, helped by Brent’s surge.
In addition to revived concerns about Iran’s nuclear program, continuing unrest in Syria, stepped up violence in OPEC-member Nigeria and recent North Sea production disruptions also were cited as being more supportive to Brent prices.
Qatar’s prime minister called for Arab states to meet Saturday to address Syria’s failure to implement a deal struck with the Arab League to end the offensive against protesters opposing Syrian President Bashar al-Assad.
The threat of a strike at Brazil’s state-oil company Petrobras set for November 16 set up another supportive factor as the Northern hemisphere’s winter fuel season approaches.
While a stronger dollar can pressure dollar-denominated oil prices, oil futures rose despite a rising dollar index .DXR.
The euro dropped against the dollar as record high Italian bond yields and political uncertainty stoked concerns about the region’s sovereign debt problems.
Europe’s political and sovereign debt uncertainty pressured European equities, but after a volatile session also marked by low trading volume, U.S. stocks finished higher.
Copper fell a second straight session on concerns that a spreading euro zone crisis will dampen economic growth and demand for the key industrial metal.
Additional reporting by Janet McGurty and Gene Ramos in New York, Christopher Johnson and Angela Bulgari in London and Manash Goswami in Singapore; editing by Marguerita Choy