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Brent steady above $122 on supply concerns, China, U.S.
March 1, 2012 / 4:06 AM / 6 years ago

Brent steady above $122 on supply concerns, China, U.S.

* U.S. crude stocks rise more than expected -EIA

* Western sanctions already disrupting Iran oil exports -EIA

* Coming Up: U.S. initial jobless claims; 1330 GMT

By Manash Goswami

SINGAPORE, March 1 (Reuters) - Brent crude futures held steady above $122 on Thursday, drawing support from a faster-than-expected expansion of the U.S. economy and better factory data from China amid concerns of supply disruption from the Middle East.

Positive numbers from two of the world’s biggest oil consumers have put a floor on Brent even after the contract surged 10.5 percent last month, the highest since February 2011. U.S. crude is under pressure from a surprise build in stockpiles last week.

Front-month Brent rose 8 cents to $112.74 a barrel by 0325 GMT, after settling $1.11 higher at $122.66 in the previous session. U.S. oil slipped 2 cents to $107.04 a barrel after settling 52 cents higher at $107.07.

“There are just too many geopolitical risk factors out there that are supporting oil,” said Tony Nunan, a risk manager at Mitsubishi Corp.

“On the other hand, a further correction cannot be ruled out because the market just went ahead of itself and there are concerns over demand as the euro zone is still not out of the woods.”

Brent slumped earlier in the week as investors booked profits after a surge to near 10-month highs, and many participants still see a possibility of a further fall.

Oil investors are worried about a disruption in supplies from OPEC producer Iran as Western sanctions tighten around the Islamic Republic due to Tehran’s disputed nuclear programme.

Sanctions on Iran are disrupting oil exports and further restrictions could tighten global oil markets already hit by a rash of outages in other countries, a report required by the recent U.S. sanctions law said on Wednesday.

With world oil prices soaring, U.S. and European insurance companies are failing to insure deliveries of Iranian oil even before the full Western sanctions go into effect, according to a report by the Energy Information Administration on Wednesday.

The EIA survey, which looked at global oil output and prices over the last two months since President Barack Obama signed the law, said markets have become increasingly tight and could worsen if Iran shuts in oil.

Against the backdrop of supply concerns, the outlook for oil demand growth is improving as China’s factories grew more than expected in February with new export orders for big firms bouncing back, a government survey showed.

The China numbers are on the back of data that showed the U.S. economy grew a bit faster than initially thought in the fourth quarter last year and manufacturing activity in the U.S. Midwest rose to a 10-month high in February.

Reporting by Manash Goswami; Editing by Sugita Katyal

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