Brent remains above $100 on stimulus hopes, supply threats

Wed Jul 4, 2012 7:02am EDT
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By Jessica Jaganathan and Ramya Venugopal

SINGAPORE (Reuters) - Brent crude slipped on Wednesday, but stayed above $100 per barrel as weak global economic data boosted expectations for more monetary policy stimulus, while rising tension over Iran's nuclear program fed worries about disruptions to supply.

Iran said it had successfully tested medium-range missiles capable of hitting Israel as a response to threats of attack, further stoking tension between Tehran and the West, and increasing the risk premium on oil prices.

Brent crude had slipped 35 cents to $100.33 per barrel by 2.37 a.m. EDT, after jumping more than 3 percent in the previous session on short-covering before the U.S. Independence Day holiday on Wednesday.

U.S. crude fell 59 cents to $87.07 after settling on Tuesday at its highest close since May 30.

"Oil prices are being supported by expectations of monetary stimulus from central banks, coinciding with concerns of supply disruptions from Iran," said Natalie Robertson, an analyst with ANZ Bank.

There was a risk of Iran blocking tankers in the Strait of Hormuz, she added.

Iran has previously threatened to block the waterway, through which more than a third of the world's sea-borne oil trade passes, in response to increasingly harsh sanctions by the United States and its allies aimed at forcing it to curb its nuclear research program.

The Islamic Republic announced the "Great Prophet 7" missile exercise on Sunday after a European embargo against Iranian crude oil purchases took full effect following another fruitless round of world power talks with Tehran.   Continued...

An employee holds a gas pump at a gas station of Hyundai Oilbank in Seoul June 15, 2012. REUTERS/Choi Dae-woong