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Oil up to $119, supply concerns support | ASHARQ AL-AWSAT English Archive 2005 -2017
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LONDON, (Reuters) – Oil rose to $119 a barrel on Friday, trimming its decline this week, as an improvement in German business sentiment countered nervousness about the euro zone debt crisis, while worries about supply from sanctions-bound Iran also lent support.

German business sentiment rose for the sixth month in a row in April, a survey showed on Friday. Oil buyers are cutting purchases of Iranian crude in April, industry sources said this week, adding to signs Western sanctions are curbing its sales.

Brent crude gained $1.37 to $119.37 a barrel by 1212 GMT, rebounding from a low of $116.70 reached on Wednesday. U.S. crude added 98 cents to $103.25 and was heading for a weekly gain.

“I think we’ve marked the bottom of this downward move,” said Christopher Bellew, a broker at Jefferies Bache in London. Support for Brent is coming from “the impact of sanctions on Iran and probably, once refineries come out of turnaround, quite a tight supply situation,” he said.

The North Sea crude market, which underpins Brent futures, has come under pressure this week as maintenance at refineries curbed demand. Brent’s decline this week was earlier on Friday on track to be the steepest in absolute terms since mid-January.

The Munich-based Ifo think tank said on Friday its German business climate index, based on a monthly survey of some 7,000 companies, inched up to 109.9 in April from 109.8 in March, taking it to its highest level since July 2011.

A Spanish bond sale on Thursday had failed to ease concerns about the sustainability of the country’s debt, while a U.S. employment report suggested a slowdown in job creation, dimming the outlook for oil demand.

According to Reuters polls on Thursday, the global economy is set to expand by 3.3 percent this year, slower than the International Monetary Fund’s 3.5 percent growth estimate.

IRAN

Concern about possible supply shortages as Western sanctions target exports from Iran helped to send Brent to above $128 a barrel in March, the highest since 2008.

Helping to allay those concerns, top world exporter Saudi Arabia is pumping crude at the highest rate in decades and its Oil Minister, Ali al-Naimi, said on April 13 the kingdom was “determined” to see a lower oil price.

Talks between world powers and Iran over its nuclear programme have also eased the pressure on prices. A second round of discussions is scheduled to take place in Baghdad on May 23.

U.S. crude remained supported on expectations that an oil glut in the U.S. Midwest would ease with an earlier-than-scheduled plan to reverse the flow of the Seaway crude pipeline.

Brent’s premium to U.S. crude was trading above $15 on Friday, having weakened from almost $22 on April 5.