BUSINESS

Oil prices waver after supply report and Iran threat to ban sales of crude to Europe

01/25/2012 02:28 EST | Updated 03/26/2012 05:12 EDT
NEW YORK, N.Y. - Oil prices are wavering as traders weigh an increase in U.S. crude supplies against a threat from Iran to halt oil sales to Europe.

Benchmark crude on Wednesday rose 39 cents to US$99.34 per barrel in New York.

The Energy Department said the nation's crude supplies increased by 3.6 million barrels last week, far more than analysts expected. Demand for oil dropped by about four per cent. Gasoline demand was down as well, with the four-week average 6.4 per cent below year-ago levels.

The latest threat from Iran follows a European Union decision to enforce an oil embargo against Iran starting this summer because of Iran's secretive nuclear program. EU nations account for about 18 per cent of Iran's oil sales, and Iranian lawmakers think cutting off oil to Europe would hurt those nations more than it would Iran.

China is Iran's biggest oil customer. It has no plans to participate in an oil embargo, and experts think Iran would sell more oil to China at a discount to offset an embargo by other nations.

Meanwhile natural gas prices continue to rebound from recent 10-year lows, rising more than six per cent to $2.72 per 1,000 cubic feet on Wednesday. Prices are being pushed up by forecasts for cooler winter temperatures across much of the country, closer to average for this time of year. The mild winter thus far has slowed demand for natural gas to heat homes.