Saturday 31 March 2012

Oil Prices fall as Pipeline Explosion News Denied

Saudi Arabia on March 2, denied an Iranian scare of an explosion in gas pipeline. The denial led to an increase in oil prices taking it to $108 a barrel. On March 2, benchmark crude up for April delivery was at $107.89, which shot by $1.77 and reached $108.84 a barrel in New York.
In London the Brent crude was at $124.74 per barrel, low by $1.46, on the ICE Futures exchange.
Before the Saudi Denial Crude had leaped to $110.55 on Thursday after there was a report from an unconfirmed Iranian source of an explosion in a pipeline; which Saudi officials denied later.
Last month the oil prices were near $96 amid apprehensions that Iran’s nuclear program policies might disrupt the oil supplies through the Strait of Hormuz. On one hand the US and Europe are imposing tough sanctions on Iran, while on the other hand, Middle East countries are threatening to cut oil supplies, by halting oil tankers that pass through the strait.
Israel is planning to test a new ballistic missile soon; the Israeli Prime Minister is also scheduled to meet the US President to discuss the Iranian issue.
Recently Commerzbank, Frankfurt reported that the crisis in Iran is one of the prime causes to trigger off the oil prices early this year. Concerns regarding supply disruption, the report added might persist for some more time, thereby giving way to a long standing risk premium on oil prices.
Adding further to thy increase in oil prices is the recovering US economy, with investors looking at crude optimistically, and also due to the lurking Iran fear. On Thursday, the government said that application pertaining to unemployment benefits have sized down, with a parallel rise in spending on construction of residential properties. Retail sales have also strengthened in February.
While few analysts feel pessimist about the gasoline prices, favoring economic recovery, others are optimistic about it too.

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