Oil up on improved German sentiment

Crude: rises

Oil prices rose on Friday as improved German business sentiment countered nervousness about the euro zone debt crisis, while a weaker dollar and stronger equities also lent support.

Brent crude's gains could not prevent a second straight weekly loss, while US crude managed a $0.22 weekly gain as the expiring May contract went off the board higher, though well below its intraday peak as Wall Street pared gains.

German business sentiment rose for the sixth month in a row in April. The Munich-based Ifo think tank said its business climate index inched up from March to its highest since July 2011, Reuters reported.

The German data helped fuel the euro's climb to a two-week high against the dollar, and the greenback's weakness coupled with stronger equities added lift for oil prices.

"People are talking about the Ifo being better than expected and may be reducing the fear about the debt crisis, and the weak dollar and higher equities help crude, along with short-covering ahead of the weekend," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Brent June crude rose $0.76 to settle at $118.76 per barrel, having reached $119.69. For the week, Brent fell $3.07, or 2.52% and it slumped to $116.70 intraday on Wednesday, the lowest since 10 February.

Expiring US May crude gained $0.78 to settle at $103.05 per barrel, after rising $2 to $104.27.

US June crude added $1.16 to settle at $103.88 per barrel.

Friday's price gains came with total trading volumes still 25% below 30-day averages for Brent and US crude, and turnover for both was under half a million lots.

Money managers raised their net long US crude futures and options positions in the week to 17 April, data from the US Commodity Futures Trading Commission showed.

Brent's premium to its US counterpart narrowed to end at $14.88 per barrel based on June settlements, but having recovered after testing support near $13 per barrel earlier in the week.

The Brent-US crude spread retreated from last week's close at $19 after Monday's news that Enterprise Product Partners and Enbridge plan to reverse the flow of the Seaway oil pipeline by mid-May, two weeks ahead of schedule.

The reversal is intended to ease the glut in US crude stockpiles in the Midwest as the pipeline brings Canadian oil and North Dakota crude to the US Gulf Coast.

While crude oil demand in the US continued to fall in March, gasoline consumption rose for a second consecutive month, the industry group American Petroleum Institute said on Friday.

The API's fuel demand figure for March is higher than the US Energy Information Administration's preliminary estimate. The EIA issues its revised March number at the end of May.

Despite large drops recently in US gasoline inventories, they were nearly 6 million barrels above the year-earlier level as of 13 April, according to Wednesday's weekly EIA report.

Iran's crude exports have slipped to 2.1 million barrels per day, compared with an average of 2.3 million bpd in the last Iranian year that ended on 19 March, Iranian oil officials said in a report on Friday.

Tightening sanctions on Iran and the EU’s embargo on Iranian crude purchases set for July, along with lower North Sea production, helped send Brent prices above $128 per barrel in March, the highest since 2008.

But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower US economic and employment growth, helped pull oil prices back from first-quarter peaks.

The EU could review in the next two months an embargo on Iranian oil imports due to take effect in July, a senior EU official said.


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