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Oil Choppy, Brent Retakes $118 on Iran Jitters

Tyler Stableford | Image Bank | Getty Images

Oil prices rose on Thursday as fears about gasoline supply pulled the complex higher, outweighing concerns of weakening economic output in the euro zone.

Gasoline prices rose more than 2 percent on Thursday on the expectation that a busy refinery maintenance season could draw down stockpiles, despite current healthy levels.

"About the only thing going on is a panic attack regarding gasoline. There is a fear in the marketplace that gasoline supplies will fall short," said Tim Evans, an energy analyst for Citi Futures perspective.

Gasoline inventories on the U.S. East Coast rose to their highest in nearly a year, according to government data on Wednesday.

"We have the data over on one side of the balance here, and we have this surging price that reflects anxiety over the future on the other," Evans said.

Brent crude oil edged up six cents to trade above $118 per barrel. April Brent futures became the front-month contract on Thursday. U.S. crude rose 25 cents to $97.26.

The U.S. RBOB gasoline contract was up more than 9 cents to $3.09.

Expectations of higher oil demand were dampened by European data. Euro zone economic output fell 0.6 percent in the final quarter of 2012, according to the European Union's statistics office. This is a greater drop than the 0.4 percent expected by analysts polled by Reuters.

Germany, France and Italy saw their economies, the three biggest in the euro zone, shrink more than expected. The German economy contracted by 0.6 percent, its worst performance since 2009, and well below analyst forecasts.

Data showed the number of Americans filing claims for unemployment fell more than expected last week, suggesting an accelerating economic recovery for the world's largest oil consumer.

Oil Supply Concerns

Supply worries in the Middle East returned to the forefront after the International Atomic Energy Agency failed to reach a deal in talks with Iran over investigating the country's nuclear program.

Additionally, earlier optimism that oil consumption would increase was offset on Wednesday when the International Energy Agency cut its 2013 oil demand growth forecast.

This report contradicted the assessments of the U.S. Energy Information Administration and the Organization of the Petroleum Exporting Countries, which both earlier this week forecast faster-than-expected growth in global oil demand this year.