Oil Jumps Above $66 as Cyclone Nears Arabian Peninsula
U.S. broke above $66 and London Brent pierced $70 on news a cyclone was headed towards the oil-producing Arabian peninsula with a potential to disrupt shipping and output.
Top exporter Saudi Arabia said its oil facilities were expected to escape unscathed from the gathering storm. Fellow OPEC member the United Arab Emirates also appeared to be outside the path of the storm, a shipping agent said.
Minor oil producer Oman put its army and police on high alert, however, and warned the population of very high waves when winds of up to 127 miles per hour (205 km/h) reached land.
U.S. crude was , after settling up $1.13 or 1.7% at $66.21. It moved in a wide range from $64.53 to $66.48. London Brent crude was , after trading from $68.70 to 70.63.
"Prices have turned around on news of a major tropical storm that has the potential to interrupt oil shipments from the Gulf," said Addison Armstrong of TFS Energy Futures in the United States.
Oman produces just 715,000 barrels per day of oil, a small fraction of Saudi Arabia's almost nine million bpd.
Earlier in the day, oil prices had drawn continued support from output disruptions in Nigeria that have tightened supplies of gasoline-rich crude during peak summer demand.
Investors also took note of a defiant statement by Iran's Supreme Leader Ayatollah Ali Khamenei. He said Iran, the world's fourth biggest oil exporter, would not retreat from the "field of danger" to protect its right to develop nuclear technology.
In fellow OPEC member Nigeria, militants have called a one-month truce in attacks on oil installations in the Niger Delta. But analysts saw little to suggest an end to 18 months of violence that has shut about a third of Nigeria's oil output.
"Nigeria is keeping the market quite tight," said Helen Henton, head of commodity research at Standard Chartered Bank.
She noted the International Energy Agency has repeatedly called for the Organization of the Petroleum Exporting Countries to increase production. "But OPEC is being quite strident about it being a U.S. refinery problem," she said.
A series of outages at oil refineries in top oil consumer the United States have contributed to a supply bottleneck in U.S. gasoline supplies, which are lower than usual.
Some refineries are now coming back onstream.
Oil had surged to a nine month high above $71 on May 24, partly on concerns about Nigeria and U.S. gasoline.
Dealers will remain on alert for any sign of hurricanes in the U.S. Gulf of Mexico after the Atlantic basin storm season began on June 1, although the first system of the season to approach the region -- Tropical Storm Barry -- weakened by the weekend, pouring rain on Florida.