Oil prices trading up for 6th day on US stockpiles, Iran tensions

Oil prices rose for a 6th day in trading on Wednesday on forecasts that US stockpiles are shrinking, while tensions in Iran sows concerns of global crude oil supply disruption.

“Stocks are showing the market is getting towards a more balanced situation, though it will take time,” said Alexandra Kogelnig, a consultant at JBC Energy GmbH in Vienna. “Tensions in Iran are always a factor even if there is nothing immediately happening; if something major happens it will affect exports.”

Brent crude for February settlement advanced as much as 56 cents, or 0.7 percent, to $78.20 a barrel on London’s ICE Futures Europe exchange. It traded for $78.02 at 10:35 a.m. local time. Brent has gained 71 percent this year, its biggest annual increase since 1999.

Iran yesterday accused Western countries of inciting clashes on December 27th between opposition supporters and security forces in the capital Tehran and other cities, which killed at least eight people, according to state media reports.

“After strong gains over the past year, there’s a propensity to lock in profits and reposition for 2010,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. “You’re going to see sideways movement.”

US crude inventories probably declined to about 325.7 million barrels last week from 327.5 million the prior week, according to the Bloomberg survey of 14 analysts before the Energy Department’s report.

“The demand outlook is the very big swing variable in the oil market at the moment,” said Ben Westmore, a minerals and energy economist at National Australia Bank, in a Bloomberg Television interview. “If you couple that with the fact that you have a large supply overhang, it’s difficult to see the oil price moving higher in a trend sense.”

Tags:  Iran, oil prices, stockpiles, tensions, trading, US