Oil Gains on Iran Worries, Lower U.S. Inventories
Crude oil prices firmed slightly on Wednesday as worries over Iran's nuclear ambitions countered easing fears of a gasoline supply crunch in the United States this summer driving season.
A U.N. nuclear watchdog document said Tehran began making nuclear fuel in an underground plant and started up more than 1,300 centrifuge machines in a drive to lay a basis for "industrial scale" enrichment.
Both moves intensified the key oil exporter's defiance of United Nations resolutions demanding it stop enriching uranium over fears its professed civilian energy program is a cover for mastering the means to build atomic bombs.
U.S. crude gained 3 cents or 0.04% to settle at $63.13 after losing 51 cents on Tuesday. London Brent crude settled up 11 cents to $66.04 a barrel after a fall of $1.32 on Tuesday.
The gains were tempered by a U.S. government report on Wednesday showing an increase in the nation's refining activity -- a sign that gasoline stocks could rise ahead of peak summer
driving demand.
"The key is that refinery runs are up, which means more gasoline supply in the future. The cavalry is coming over the ridge," said Tim Evans, energy analyst at Citigroup Global Markets in New York.
Fears of a gasoline supply crunch in the world's biggest oil consumer had underpinned a sharp rally in oil prices in recent weeks, after heavy refinery repairs shaved more than 13% off U.S. inventories since early February.
The U.S. Energy Information Administration said refinery utilization rose 2 percentage points last week to 90.4% of capacity. Despite the boost, gasoline stockpiles fell for a 10th week, down 2.7 million barrels, while crude stocks were down 1.0 million barrels.
Nigeria Prospects
Prospects have also grown for more gasoline-rich oil from Nigeria on news the 380,000 barrel per day (bpd) Forcados oil fields could start to come back onstream as early as this month, following a year's closure due to militant attacks.
Nigerian Energy Minister Edmund Daukoru said on Wednesday that Forcados would resume operations at the end of May.
Daukoru added that a rise in global oil demand may soak up the extra Nigerian supplies, appearing to suggest the country might not cut output from elsewhere as a way to ensure Nigeria keeps meeting its OPEC production target if Forcados restarts.
"OPEC might agree to increase production, but I don't want to speculate. But if demand goes up we want to sell, too," Daukoru told reporters in London.
Markets are still waiting for confirmation on Forcados from its operator, Royal Dutch Shell. On Wednesday, it said only that it aimed to restart Forcados within months and would return to the area if safe to do so.
Traders are also on alert over violence in Nigeria, fearing that presidential elections on April 21 could lead to more output disruptions. Nigeria's government on Wednesday rejected an opposition call to postpone the presidential ballot.