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DJ UPDATE:Oil Futures: NY Crude Rallies;Iran Nuclear Tensions(Comtex Business Via Thomson Dialog NewsEdge)Jan 11, 2006 (Dow Jones Commodities News via Comtex) --(Adds EIA data, settlement prices and analyst comments) By Masood Farivar Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Oil prices rose moderately and briefly topped $64 a barrel Wednesday as investors reacted to rising tensions between the West and Iran over Tehran's suspected nuclear weapons program. The February crude contract on the New York Mercantile Exchange rose 57 cents to $63.94 after falling as low as $62.60 a barrel. The February Brent contract on London's ICE Futures rose 25 cents to $62.17 a barrel after falling as low as $61.04 a barrel. Petroleum products futures ended with moderate losses. February heating oil fell 1.08 cents to $1.7271 a gallon. February gasoline slid 40 points to $1.7331 a gallon. ICE gasoil for January lost $11.75 to finish at $510.50 a metric ton. The gains in crude futures came as the war of words between Iran and the West heated up a day after Iran removed seals on a once-secret nuclear facility. Iran's hard-liner President Mahmoud Ahmadinejad shrugged off the international outcry over his government's decision, saying Iran isn't frightened by the superpowers "and their noise." A powerful cleric - former president Hashemi Rafsanjani - took a sharper tone, denouncing the West's "colonial policy. "If they cause any disturbance, they will ultimately regret it," he warned. For his part, U.S. Vice President Richard Cheney, a tough critic of the Iranian regime, said it was "pretty clear" Iran was restarting its nuclear program so it could develop weapons, not generate power. To traders, the flurry of news headlines raised the specter of a confrontation between the West and Iran and the possibility of a disruption in Iranian oil supplies. "We heard a lot of talk about Iran today, it certainly played a part in the market," a broker said. "Iran is a little bit more of a worry than Iraq ever was. We know they have the ability to build a nuclear program." Iran's the second-largest member of the Organization of Petroleum Exporting Countries. While few analysts expect the confrontation to lead to an all-out war, there is growing concern about Iran facing international sanctions and even limited surgical strikes of its nuclear facilities by the U.S., Israel or both. Those worries overshadowed mostly bearish inventory data released by the federal Energy Information Administration. The data showed that U.S. gasoline stocks grew by 4.5 million barrels last week to 208.8 million barrels, while distillate stocks increased by 4.9 million barrels to 133.8 million barrels. While the bearish data caused a sharp sell-off in petroleum product futures, crude futures held their ground in part on the back of a crude inventory drawdown reported by the EIA, leading hedge funds and other investors to push futures well into positive territory. "I believe it was mostly the Iranian worries that drove things today," said Tom Bentz, an analyst at BNP Paribas Futures. "But the reality is the market wanted to make a new high above the $64.61, and it did so. Now that it has been done the question is: Are the highs of the move in? They could be." Jim Steel, an analyst at Man Financial, said it is far from clear that the Iran nuclear showdown will lead to war or even a supply disruption. "When the markets trade above what the supply-and- demand balance would imply, the natural tendency would be to look to a geopolitical issue to explain the anomaly," he said. Nevertheless, concerns about rising geopolitical risks and a tightening global market have led to an influx of new investment money into the market, analysts said. All manner of new investors from the Chinese government to American "doctors and dentists" have started investing in energy futures, said Peter Beutel, analyst at Cameron Hanover in New Canaan, Conn. "This market is definitely dancing to the tune of the new investment money coming in rather than old-fashioned supply-and-demand fundamentals," he said. "Obviously, there are political factors here that are playing on traders' minds. The changing of the guard in Israel and the Iranian situation are two of the factors that are closing to a smoking gun to this advance in prices." Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day's settlement. Highs and lows include levels hit in overnight trade. Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents. Nymex Prices: Contract Settle Change Vs Low High Tuesday Feb crude oil 63.94 +57 62.60 64.80 Mar crude oil 64.45 +35 63.15 65.15 Feb heating oil 172.71 -108 169.10 174.90 Mar heating oil 175.82 -126 172.40 178.10 Feb gasoline 173.31 -40 169.10 176.20 Mar gasoline 177.33 -55 173.50 180.10 ICE Prices: Contract Settle Change Vs Low High Tuesday Feb ICE Brent 62.17 +25 61.04 62.94 Mar ICE Brent 62.44 +14 61.27 63.26 Jan gasoil 510.50 -1175 506.50 525.00 Feb gasoil 519.25 -1200 515.75 534.25 -By Masood Farivar, Dow Jones Newswires; 201-938-2094; [email protected]. (END) Dow Jones Newswires 01-11-06 1638ET |