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Brent Crude Trades Near Three-Day High Amid Iran Nuclear Talks

Feb. 14 (Bloomberg) -- Brent crude futures traded near a three-day high after United Nations nuclear officials failed to reach a deal on inspections with Iran.

The European benchmark advanced as much as 0.4 percent. UN inspectors didn’t secure an agreement that would allow investigators access to alleged atomic facilities and couldn’t settle on a date for another meeting, chief inspector Herman Nackaerts said today in Vienna. U.S. crude inventories rose less than forecast last week, the Energy Department said yesterday.

“Prices will be buoyed by the back and forth in nuclear talks,” said Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark.

Brent for April settlement climbed as much as 41 cents to $118.29 on the London-based ICE Futures Europe exchange and traded at $117.48 at 12:57 p.m. local time. The volume of all futures traded was 2 percent above the 100-day average. The March contract settled at $118.72 when it expired yesterday, the highest closing level for the front-month since Feb. 8.

The front-month European benchmark grade was at a premium of $19.74 to West Texas Intermediate. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.

WTI for March delivery rose 12 cents to $97.13 a barrel in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was in line with the 100-day average. The contract fell 50 cents to $97.01 yesterday, the most since Feb. 7 and the lowest since Feb. 8.

IAEA Inspections

“Time is needed to reflect on a way forward,” Nackaerts said today at Vienna International Airport after returning from a one-day meeting in Tehran. The International Atomic Energy Agency has “unwavering” commitment to negotiations, he said.

Iran is under Western sanctions on its oil sales because of its nuclear program, which the U.S. and European Union say is designed to make an atomic weapon, a charge the Islamic republic denies. The country’s crude shipments slid at least 36 percent to less than 1 million barrels a day in January and output slumped to 2.65 million a day, the lowest in more than three decades, the International Energy Agency said in its monthly report yesterday.

Goldman Sachs Group Inc. has stuck to its call that Brent’s premium to WTI will shrink dramatically as supplies decline at Cushing, Oklahoma, the main U.S. storage hub. The bank said in a Feb. 10 report that the gap will narrow to $7.50 in the second quarter and $5 in six months, echoing its year-old view. Forecasts from a dozen other banks, including Morgan Stanley and UBS AG, ranged from $12 to $20 for this year’s spread.

Cushing Inventories

The Brent-WTI gap has grown as rising U.S. shale output increased crude inventories at Cushing, which climbed to a record in January. Stockpiles decreased 1.1 million barrels to 50.2 million last week, the Energy Information Administration, the Energy Department’s statistical arm, said in a report yesterday. That marked a second weekly drop and the biggest since July.

Inventories nationwide rose 560,000 barrels, the report showed. They were forecast to increase by 2.2 million, according to the median estimate in a Bloomberg News survey. U.S. crude production climbed to 7.06 million barrels a day, the highest since December 1992, the EIA said.

WTI may rebound after a bullish technical formation known as a “golden cross,” according to data compiled by Bloomberg. The 100-day moving average, at $90.63 a barrel today, has risen above the 200-day indicator for the first time since July. Investors typically buy contracts when a moving average climbs over a longer-term one.

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