On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

650 AM Hibbing, Minnesota

Weather

Current Conditions(Hibbing,MN 55746)

More Weather »
63° Feels Like: 63°
Wind: NW 6 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Clear 51°

Tomorrow

Sunny 80°

Fri Night

Clear 48°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Oil holds above $114 on Middle East supply worries

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El
A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El

By Alice Baghdjian

LONDON (Reuters) - Brent crude oil fell towards $114 a barrel but remained close to a three-week high on Wednesday, as worries over the security of Middle East supplies outweighed increasing evidence of slowing global economic growth.

Weak risk sentiment coursed through financial markets, pulling down stock markets and boosting the dollar after the International Monetary Fund said a deepening euro zone debt crisis was threatening the global economy.

The IMF said in its semi-annual check on the world's financial health that risks to global financial stability had risen in the past six months, leaving confidence "very fragile.

But shelling along the Turkey-Syria border, hostility between Iran and the West, and an impending Israeli election, have raised worries over the risks to oil supplies from the Middle East Gulf, keeping a floor under prices.

Brent crude fell 25 cents a barrel to $114.25 by 1035 GMT (06.35 a.m. EDT), after hitting its highest for three weeks earlier in the session. U.S. crude fell 50 cents to $91.89 a barrel.

Israeli Prime Minister Benjamin Netanyahu called an early election on Tuesday, eager to strengthen his political position ahead of any military action against Iran.

"The nuclear dispute with Iran is going to be an election issue in Israel, and this might cause the price to rise in coming weeks, or at least support it," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.

"Other factors are playing a hand in this, such as the tensions between Turkey and Syria," Fritsch added.

CHINA

Global economic gloom, meanwhile, has put a dampener on many markets.

China's annual economic growth probably slowed for a seventh straight quarter in the July-September period to its weakest level since the depths of the global financial crisis, a Reuters poll showed.

On Tuesday the IMF said that the global economic slowdown was worsening and cut its growth forecasts for the second time since April, warning U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

The IMF forecast global output in 2012 would grow by only 3.3 percent, down from a July estimate of 3.5 percent.

"Investors would like to remain cautious as the economic conditions across the euro zone remain fragile with Greece and Portugal being the main issue for the short-term," said Myrto Sokou, a senior research analyst at Sucden Financial.

Middle East tensions remain a constant worry for oil and are countering bearish fundamentals.

Turkey and Syria have repeatedly exchanged fire since last week after Syrian shells struck a Turkish border town. Turkey's chief of general staff said on Wednesday that the country's military would respond with greater force if shelling from Syria continued to spill over the border.

NATO says that it has plans in place to defend Turkey against an attack from Syria and will aim to provide assistance if Ankara asks for it.

"There is no shortage of supply needing to be offset by additional oil at the moment," Fritsch said. "Indeed, it is rather the supply risks and the ultra-loose monetary policy pursued by central banks that are driving the price upwards."

Investors were looking to weekly data on oil inventories from the United States, due this week, for hints on demand at the top oil consumer. Analysts forecast a 1 million barrel build in crude stocks in the week to October 5.

Industry data from the American Petroleum Institute will be released at 2030 GMT on Wednesday and figures from the U.S. government's Department of Energy will follow on Thursday, both sets of figures delayed a day by the U.S. Columbus Day holiday.

(Additional reporting by Florance Tan in Singapore; editing by Christopher Johnson and James Jukwey)

Comments