Rising oil price raises concerns
OIL prices hovered near $97 (about R733) a barrel yesterday in Asia amid trader concern that US crude supplies will continue to rise because of weak demand.
Benchmark crude for March delivery fell 6 cents at $96.86 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 93 cents to settle at $96.91 on Monday.
Brent crude fell 15 cents to $115.78 a barrel on the ICE Futures Exchange in London.
Crude inventories rose about 2.3-million barrels last week, analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos said.
The American Petroleum Institute announced its weekly supply data late yesterday while the (US) Energy Department's Energy Information Administration will report its figures today.
Crude supplies in the US have increased for the past three weeks at a key Cushing, Oklahoma, delivery point amid a mild US winter.
"There's plenty of supply for light, sweet crude oil and there's no real demand for gasoline (petrol) right now. It's cold enough to keep people inside, but it is not cold enough for them to be burning much oil or gas to stay warm," energy consultant Cameron Hanover said.
Investors are also closely watching rising tensions between Western powers and Iran, the world's third-largest crude exporter.
The US imposed new sanctions on Monday that are designed to make it more difficult for Iran to sell its oil through traditional banking routes and help dissuade the Middle East nation from developing its nuclear program.
European nations plan to stop buying Iranian oil by summer while Iran has threatened to block oil tanker shipments in the Persian Gulf if the embargo is implemented. The US and Israel have said they will not allow Iran to build nuclear weapons.
"If Israel were to strike Iran in an attempt to slow its nuclear programme, energy prices would most likely spike in excess of $150 a barrel," Richard Soultanian of NUS Consulting said.