Oil Price Settles Near $120 on Pipeline Attack
Oil rose on Thursday on expectations a one million barrel per day pipeline that was attacked by Kurdish separatists in Turkey could remain shut for up to two weeks.
The Baku - Tbilisi - Ceyhan (BTC) oil pipeline, which pumps the more than 1 percent of world supply from fields in the Azeri sector of the Caspian Sea to the Turkish Mediterranean coast, was still ablaze after the Tuesday night explosion.
U.S. light, sweet crude settled up $1.44 at $120.02, rebounding from three-month lows after concerns about faltering demand in the United States and Europe helped push oil off a July 11 record of $147.27.
London Brent crude settled 86 cents higher at $117.86.
"The loss of supply from Azerbaijan only adds to a new layer of worry to a market that has found ways to operate with multiple layers of worry, already," said Peter Beutel, president of trading consultants Cameron Hanover.
Further support has come from ongoing supply disruptions from OPEC member Nigeria from militant attacks and escalating tension between Iran and the West over Tehran's nuclear program.
A top U.N. nuclear watchdog official began talks in Iran aimed at improving cooperation with the International Atomic Energy Agency over the program, which Iran insists is peaceful. (Watch the accompanying video to see how the oil crisis intertwines with the mortgage mess...)
Diplomats in Vienna, where the IAEA is based, said the visit was a fresh effort to extract Iranian clarifications about intelligence reports suggesting it illicitly tried to design atomic bombs.
In Nigeria, Royal Dutch Shell said repairs continued on a pipeline sabotaged last week.
Data from the U.S. government's Energy Information Administration on Wednesday showed a much steeper than expected build in crude stocks, the latest sign soaring fuel costs and an ailing economy have reduced oil demand.
Crude oil inventories rose by 1.7 million barrels in the week to Aug. 1, beating expectations of a 300,000-barrel build. Distillate stocks, including heating oil and diesel, rose by 2.8 million barrels, also above forecasts.
Gasoline stocks fell by 4.4 million barrels, much steeper than the 1.2 million barrel draw analysts had predicted.