Brent Up towards $120 on Iran, North Sea

Brent crude resumed its climb towards $120 a barrel on Thursday on supply concerns over Iran and an expected drop in North Sea output.

Brent crude

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[LCOCV1  Loading...      ()   ] gained after dipping earlier in the day and was up by 46 cents at $119.27 a barrel. On Wednesday, it hit a session peak of $119.99, the highest intraday price since August, and settled at $118.93, the highest settlement since June.

In euro terms, Brent prices were at the highest level since 2008, according to Reuters data.

U.S. light, sweet crude

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[CLCV1  Loading...      ()   ] was trading 3 cents down at $101.78. It pared its earlier losses due to the healthy reading of U.S. jobs data.

Iran, the world's fifth-largest oil exporter, proposed an early resumption of long-stalled nuclear talks with world powers, according to a letter from Tehran to European Union policy chief Catherine Ashton obtained by Reuters on Thursday.

"The European consumer is currently getting the double hit of Iran trying to do its most to support Brent prices and Greece continuing to pressure the euro/dollar," Olivier Jakob with Petromatrix said.

"In euros per barrel, Brent has been higher only one day in its history: July 3rd, 2008."

Iran's ambassador to Russia said on Thursday plans to cut off supplies of Iranian crude to Europe would benefit only the Islamic republic, which in the past has been heavily dependent on imported fuel due to restricted refining capacity.

But its oil ministry denied an Iranian state television report on Wednesday that the country was halting its crude exports to six European countries before the EU ban on Iranian crude becomes effective later this year.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week to a near four-year low, suggesting the labor market recovery was gaining traction.

Other government data on Thursday also pointed to sustained momentum in the economy, with builders breaking more ground on new residential projects in January and little signs of a pick-up in inflation pressures.

Global markets were broadly subdued during European trading hours as a delay in a decision on a crucial bailout for Greece unnerved investors and prompted a pause in the market rally that has marked the start of 2012.

The euro eased against the dollar. The FTSEurofirst index of top European companies opened down. After falls in Asia, the MSCI world equity index was also down.

Spreads

Prompt April Brent rose to a premium of above $1 a barrel over the May contract briefly, a market structure known as backwardation, reflecting the lower expectations for North Sea output in March.

Meanwhile, the premium of Brent over U.S. crude rose above $17 a barrel as crude stocks held at Cushing, Oklahoma, delivery hub for U.S. crude increased to their highest level since September.

The stocks at Cushing posted a 2 million barrel build, the biggest weekly increase since December 2009, while the overall U.S. crude inventories fell modestly last week, the latest U.S. government data showed on Wednesday.