Crude Holds Steady at $113 as Tension in Iran Increases and Promising Data from China Emerges
Brent crude oil continued to hold steadily above $113 on Thursday morning, trading at 113.41. The commodity remained locked between concerns about future demand and the possibility of supply interruptions.
The US reported high crude inventories on Wednesday, which put downward pressure on Brent. However the price didn't see much fluctuation as news out of China lent support to the price. As the world's second largest oil consumer, economic data that showed sluggish growth in the third quarter caused many to speculate that oil demand would weaken in the future.
However, CNBC reported that recent data from China seems to indicate that economy will improve in the fourth quarter.
Optimism regarding the Chinese economy gave Brent a bit of momentum, and tension in the Middle East picked up on Wednesday bolstering the price even more. A new development in the ongoing tension between Iran and the West led investors to believe that there could be a real possibility of an embargo or even in the worst case scenario, a war.
Iran's nuclear development program has long been disputed by members of the United Nations, and recent efforts to stop the program have resulted in sanctions designed to squeeze the country's economy and force them to abandon the project. However Iran has pressed on with uranium enrichment, claiming it needed nuclear technology for electricity.
Recently, the U.S. and EU put further sanctions on the country's oil production and banking sector after they refused to terminate the program. But Thursday brought reports that nuclear development has continued and in fact, Iran is rumored to be increasing its uranium enrichment facility. The reports confirm that the threat of escalating tension and in turn oil supply interruption is not going away.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.