Crude moves higher on Mideast tensions

SYDNEY (MarketWatch) — Crude oil futures moved off 11-week lows in electronic trading during Asian hours Wednesday, amid ongoing tension in the Middle East and ahead of key U.S. inventory data.

Benchmark Nymex light-sweet crude for March delivery (CLH11 84.87, +0.55, +0.65%) rose 28 cents to $84.60 in Asian trading hours.

The move came ahead of closely watched inventory figures from the U.S. Department of Energy, due out later in the global trading day.

Crude-oil inventories unexpectedly declined by 354,000 barrels the week of Feb. 11, according to data from the American Petroleum Institute released late Tuesday. Analysts polled by Platts had expected oil stocks to increase 2.8 million barrels.

Protests in the Middle East have underpinned oil prices in recent sessions.

“With the Mideast backdrop likely remaining tense and now engulfing several oil-producing countries, (unlike the case with Egypt), we suspect the path of least resistance, at least for the Brent contract, is higher still,” MF Global Daily Energy analysts said in a note.

Brent inches up

Brent for April delivery edged higher in Asian trading hours on ICE Futures in London, adding 0.1% to $101.92.

The price differential between the two major benchmark types of oil, Brent and Nymex West Texas Intermediate, recently hit a record of $16 a barrel.

Analysts believe that inventory trends in Cushing, Oklahoma, are the main reason for the significant price discrepancy.

“We suspect that of the two contracts, Brent is the one picking up the ‘true pulse’ of the energy market, best evidenced in Monday’s action, where prices rose sharply on account of the simmering geopolitical tensions in the Middle East, and the robust Chinese import data that came out earlier in the day,” MF Global Daily Energy analysts said.

(Source: http://www.marketwatch.com/story/crude-moves-higher-on-mideast-tensions-2011-02-16)