Oil edges up on Iran, but posts fourth weekly loss

Oil prices rose for a second day on the lack of progress in negotiations with Iran over its disputed nuclear program, but crude futures posted a fourth straight weekly loss as Europe’s debt problems threatened economic growth and petroleum demand.
Euro-zone political turmoil and economic uncertainty pressured the euro against the dollar, and along with recent signs of slowing Chinese economic growth and rising U.S. crude oil inventories, helped limit gains of Brent and U.S. crude futures.
This week’s negotiations on Iran’s nuclear program yielded little progress, though the six major powers and Tehran agreed to meet again in June, keeping the threat of conflict and supply disruptions in play for investors.
News that Iran has enhanced its ability to enrich uranium and that U.N. inspectors found traces of uranium particles enriched at a higher rate than reported by Iran increased concerns in the oil markets ahead of the three-day U.S. Memorial Day holiday weekend.
U.S. consumer sentiment rose in May to its highest in more than four years, the Thomson Reuters/University of Michigan final reading for the month said. The bigger-than-expected increase added support for oil prices.
Brent July crude rose 28 cents to settle at $106.83 a barrel, having swung from $106.02 to $107.24. The fourth straight weekly loss was only 31 cents, but Brent has fallen $13, or 10.85 percent, in that four-week period.
U.S. July crude edged up 20 cents to settle at $90.86, having moved from $90.20 to $91.32, and remaining inside Thursday’s trading range. For the week, it fell 62 cents and losses during the four-week period total $14.07, or 13.4 percent.
Brent’s premium to U.S. crude increased to $15.97, after dropping to $15.57 and reaching $16.25 intraday.
Trading volumes were anemic, with U.S. crude turnover 56 percent below the 30-day average. Brent dealings outpaced U.S. volume, but were 37 percent below the Brent 30-day average.
U.S. gasoline futures for June delivery edged up 1.64 cents to finish at $2.8929 a gallon, ahead of the busy summer driving season, but rose just 0.66 cents from the previous week’s close. All week long, the gasoline contract was range-bound and pivoted around its 200-day moving average, having moved below the gauge on February 17 for the first time since February 2.
At the settlement price, U.S. gasoline futures had retraced half of their 41 percent rally from November to end-of March, during which prices rose $1 to $3.4455 a gallon. Technical analysts consider the so-called 50 percent Fibonacci retracement significant because it brings the price below a key level of support.
Meanwhile, money managers raised their net long U.S. crude futures and options positions, but by only two contracts, in the period to May 22, the U.S. Commodity Futures Trading Commission said.
“The drop in the euro against the dollar and the drama in the euro zone have pulled crude off highs, but the IAEA finding high uranium traces in Iran may help keep crude prices supported … and brings up the question again of how patient will Israel continue to be,” said Phil Flynn, an analyst at PFGBest Research in Chicago.
The euro tumbled to nearly a two-year low against the dollar on Friday as fears of a possible Greek exit from the euro zone and the risk that other debt-plagued countries could also leave the bloc rattled markets.
A request from Spain’s wealthiest autonomous region, Catalonia, for central government help with refinancing debt was the latest news to hit the euro.
IRAN’S NUCLEAR PROGRAM DISPUTE: Iran’s insistence on the right to enrich uranium and Western powers’ requirement that Tehran first shut down higher-grade enrichment before sanctions are lifted continued to be sticking points in talks held in Baghdad this week. A senior State Department official headed to Tel Aviv on Friday to reaffirm the U.S. commitment to Israel’s security following the talks between six world powers and Iran.
The U.N.’s IAEA said Iran has raised its potential capacity to make sensitive nuclear material by installing hundreds of new enrichment centrifuges at the Fordow underground site. The IAEA also said on Friday that it had found traces of uranium particles enriched to up to 27 percent at Iran’s bunkered Fordow site, compared with the 20 percent enrichment Tehran has officially reported to the IAEA. The IAEA said that Iran told the U.N. agency that this higher-grade enrichment “may happen for technical reasons beyond the operator’s control.”