Oil Rises for Second Day on Recovery Outlook, Iran Tensions

Sept. 28 (Bloomberg) -- Crude oil rose for a second day on speculation the global economy’s gradual recovery will increase demand for fuel and energy.

A Conference Board report tomorrow in the U.S., the world’s largest oil user, may show consumer confidence is at its highest in a year, according to economists surveyed by Bloomberg News. Prices also rose after Iran, the world’s fourth-largest oil producer, conducted missile tests days before meeting with western officials over a previously secret nuclear facility.

“The overall trend is still up,” said Toby Hassall, research analyst with Commodity Warrants Australia Pty in Sydney. “We’re in the early stages of a recovery. We’ve got a fair bit of data this week which could make things a bit clearer.”

Crude for November delivery gained as much as 47 cents, or 0.7 percent, to $66.49 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $66.36 at 7:22 a.m. in Singapore.

The contract rose 13 cents to $66.02 on Sept. 25, trimming its loss for the week to 8.9 percent. Prices climbed from $65.05, an eight-week low, after U.S. President Barack Obama said a new nuclear plant Iran is building shows the Islamist nation is flouting international law.

Oil fell last week as mixed economic data pulled U.S. equity prices lower and the nation’s oil and fuel stockpiles rose. U.S. demand, based on deliveries of all fuel types from refineries and terminals, is at its lowest since the end of June after three straight weeks of declines, the Energy Department said Sept. 23.

‘Reality Check’

“Those inventory numbers were a bit of a reality check, given that the crude market has been relying on support from equities and a weaker dollar,” Hassall said. Weak equity prices this week could be enough to push oil toward $60, he said.

Brent crude for November settlement rose 34 cents, or 0.5 percent, to $65.45 a barrel on the London-based ICE Futures Europe exchange. It climbed 0.5 percent to $65.11 on Sept. 25.

Officials from the U.S., France, U.K., Russia, China and Germany will meet Iranian counterparts in Geneva on Oct. 1. Extra sanctions are being prepared after Iran secretly began building a pilot fuel-enrichment plant, officials said last.

The international community has a “rich list” of economic, banking, and technology sanctions it can apply to get Iran to end its nuclear research, U.S. Defense Secretary Robert Gates said yesterday.

“There is no military option that does anything but buy time,” Gates said in an interview on CNN.

The more conciliatory approach of the Obama administration makes any confrontation with Iran unlikely, Hassall said. Surplus global capacity has also reduced the threat of the dispute affecting oil supplies, he said.

“Twelve to eighteen months ago it would have been a different story,” he said. “We’re just not that sensitive at this point in the economic cycle.”