Oil climbs on Iran tensions, weak dollar

NEW YORK: Oil prices rose more than 2 percent on Friday on support from the continuing tensions over Iran's disputed nuclear program and the potential for supply disruptions in the region along with the weaker dollar.
Crude futures posted marginal weekly losses, but were up on Friday after slumping the previous session on news the United States and Britain were preparing a release from strategic oil reserves later this year.

The dollar slumped after a report on U.S. consumer prices, which investors viewed as reducing the likelihood of the Federal Reserve tightening monetary policy anytime soon.

U.S. consumer prices rose the most in 10 months in February as the cost of gasoline spiked, but there was little sign that underlying inflation pressures were building.

"The reasoning is that the Fed will not be as likely to pull back on stimulus or raise interest rates, so the dollar weakened and that pushed up oil, along with the uncertainty about Iran and the SPR," said Phil Flynn, analyst at PFGBest Research in Chicago.

U.S. gasoline and heating oil also rose sharply, tagging along as Brent crude moved higher and boosted by news that Enterprise Products Partners (EPD.N) shut a U.S. Gulf Coast-to-Midwest refined products pipeline because of a valve leak.

Brent May crude rose $3.21 to settle at $125.81 a barrel, surging above its 20-day and 10-day moving averages and reaching $126.10 ahead of the close. For the week, Brent fell a mere 17 cents.

U.S. April crude rose $1.95 to settle at $107.06 a barrel, reaching $107.25 and also pushing above its 10-day and 20-day moving averages. For the week, U.S. crude dipped 34 cents.

Brent's premium to U.S. crude, now comparing May contracts, ended at $18.23 a barrel based on settlements.

Trading volumes in both contracts were lackluster. Brent's volume was 34 percent below its 30-day average, with U.S. crude 27 percent below its 30-day average, with less than two hours left for post-settlement trading.

Oil briefly trimmed gains on news that Saudi Arabia is preparing to extend this year's unexpected surge in oil sales to the United States.

Contrary to expectations that the modest recent rise in Saudi Arabia's output was bound for fast-growing Asian markets that also might need to replace barrels from Iran, preliminary data shows that shipments to the United States have without fanfare risen 25 percent to the highest level since mid-2008. (Reuters)