* German business morale picks up, outlook improves
* Brent, U.S. crude on track for 3 percent losses for week
* Coming Up: CFTC positions data 3:30 EST Friday
(Adds CFTC data)
NEW YORK, Feb 22 Oil prices rose on Friday as
German business sentiment improved, but crude futures still fell
by the largest weekly margin of 2013 after a sell-off in
commodities markets earlier this week.
German business morale increased in February at the fastest
pace in more than two years, the Munich-based Ifo think tank
said, suggesting a rebound in Europe's largest economy after a
dismal end to 2012.
Brent crude rose 57 cents to settle at $114.10 a
barrel, but was down 3 percent on the week. U.S. crude futures
rose 29 cents to settle at $93.13 a barrel, but were down 2.8
percent this week.
Oil fell sharply on Wednesday and Thursday on concern that
the U.S. Federal Reserve may wind down its massive bond buying
program earlier than expected.
Minutes from the Fed's recent policy meeting, released on
Wednesday, suggested the central bank is re-examining its
mid-term monetary policy, including its schedule for bond buying
and holding interest rates near zero, which has served to drive
demand for risky assets like oil.
Prices also eased after oil industry sources earlier this
week said Saudi Arabia, the world's top crude oil exporter,
expects to lift output in the second quarter, although the size
of the production boost was not specified.
Traders on Friday tested oil's lower trading levels, and
analysts said a price recovery could be short-lived if economic
data next week do not signal more demand for crude.
"The height of the bounce - whether today or into next week
- will provide an indication of whether oil market bullish
sentiment is resilient or whether further urgent long
liquidation is on tap," said energy specialist Tim Evans at Citi
Futures in a research note.
Further weak economic data in the U.S. and Europe has added
to concerns that a first-quarter rally for crude has been
overdone. Brent is still up by almost 3 percent this year.
A report from the European Commission on Friday forecast
that the euro zone economy will contract again in 2013, and
caution ahead of this weekend's Italian election weighed on the
euro, which fell for a third day, helping to limit gains in oil
Concerns that impending sharp automatic U.S. spending cuts
due to take effect on March 1 also weighed on oil and equity
U.S. March RBOB gasoline futures were up nearly 2
cents and March heating oil was little changed.
The March refined products contracts, due to expire next
week, were supported by U.S. government data released on
Thursday showing inventories fell more than expected last week.
On Friday, weekly data from the U.S. Commodity Futures
Trading Commission showed hedge funds and other large
speculators had cut their bets on higher U.S. crude oil prices
by 13,085 futures and option contracts in the week to Feb. 19 to
IRAN NUCLEAR TALKS
Tension between the West and Iran ahead of a resumption of
talks on Tehran's controversial nuclear program next week
continued to support oil prices.
Six world powers and Iran will meet for the first time in
eight months on Feb. 26, but analysts remain sceptical that the
talks can resolve an ongoing dispute over whether Iran is
attempting to develop nuclear weapons.
The U.N. International Atomic Energy Agency (IAEA) said on
Thursday that Iran has installed advanced centrifuges at its
main uranium enrichment plant and Tehran may face more sanctions
as U.S. lawmakers craft a bill to stop the European Central Bank
from handling business from the Iranian government.
(Reporting by Joshua Schneyer, Robert Gibbons and David
Sheppard in New York, Dasha Afanasieva in London and Florence
Tan in Singapore; Editing by Bob Burgdorfer)