Oil prices back up over $103 a barrel
Oil prices in Europe edged up in trading in anticipation of talks with Iran over its nuclear program. Oil prices peaked at $110 last month.
OilÂ pricesÂ inched above $103 a barrel Thursday, tracking a rise in financial markets, while traders turned their attention to negotiations this weekend over Iran's nuclear program.
By early afternoon in Europe, benchmarkÂ oilÂ for May delivery was up 50 cents to $103.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.68 to settle at $102.70 in New York on Wednesday.
In London, Brent crude was down 16 cents at $102.02 per barrel on the ICE Futures exchange.
Crude has jumped from $75 in October as investors worried a military attack by Israel or the U.S. on Iran's nuclear facilities could disrupt global crude supplies. However,Â oilÂ has slid from $110 last month amid optimism meetings between Iran and the U.S., France, Britain, Russia, China and Germany that begin Saturday in Turkey could ease tensions.
"If negotiations were to succeed and some acceptable compromise achieved, the energy markets would breathe a collective sigh of relief andÂ pricesÂ would decline," said Richard Soultanian of NUS Consulting. He estimated concern that Iran's crude exports will be cut by a military conflict or tighter sanctions has added about $15 to theÂ priceÂ ofÂ oil.
Analysts are most worried that Iran, OPEC's second-largestÂ oilÂ producer, will fail to compromise on its nuclear operations and Israel will launch a pre-emptive attack against them. Bank of America Merrill Lynch estimated a major supply disruption of Iranian crude would push Brent crude up by as much as $40.
"A conflict between Israel and Iran could have severe consequences for globalÂ oilÂ production and distribution," Bank of America Merrill Lynch said in a report. "A sustained rise inÂ oilÂ above $150 would likely push the U.S. into recession."
Despite the concerns about supplies from Iran â€” including anÂ oilÂ embargo by the US and the European Union â€” the International Energy Agency said that during the first three months of 2012 demand weakend while output from OPEC countries increased.
"The cycle of repeatedly tightening fundamentals evident since 2009 has been broken for now," the Paris-based IEA said in its monthlyÂ oilÂ market report. "Further surprises almost inevitably lurk around the corner for both demand and supply. But for now at least, the earlier tide of remorseless market tightening looks to have turned."
The IEA also estimated that globalÂ oilÂ stockpiles rose by over 1 million barrels a day during the first quarter of the year.
"It is clear that stockpiling so far has been driven more by concerns on supplies for the upcoming summer, after sanctions on Iran fully take effect, than by favorable storage economics," the IEA said.
Looking ahead, investors will also eye China's first quarter economic growth figures, due Friday, as the country is a major consumer of fuel.
In other energy trading, heatingÂ oilÂ was down 0.07 cent at $3.1142 per gallon and gasoline futures lost 0.1 cent at $3.2945 per gallon. Natural gas added 0.7 cent at $1.991 per 1,000 cubic feet.