Crude oil rises on Iran nuclear concern

London (Platts)--10Jan2006

Crude oil rose on Tuesday, trading above $63/bbl in New York, as Iran,
OPEC's second-largest oil producer, resumed nuclear research work after a
two-year suspension, raising the stakes in its row with the West. 

     Iran's move, which the US said it viewed with "serious concern,"
heightens the risk of Tehran being brought before the UN Security Council for
possible sanctions. The UK and Russia also expressed unease.

     "Iran has the potential to get quite serious," said Mike Wittner, global
head of energy market research at Calyon. "The overriding factor since we've
come back from the new year is new financial money coming into commodities."

     February crude on the New York Mercantile Exchange was up 50 cts at
$64.00/bbl as of 1515 GMT, after earlier gains in electronic trade. Brent
crude in London was 37 cts higher at $62.38.

     Iran Tuesday said it had removed seals at its nuclear research centers,
paving the way for the resumption of work. The country says its nuclear
program is peaceful, but the US accuses Tehran of seeking nuclear bombs. 

    The White House said Tuesday that Iran was risking a "serious escalation"
in the dispute.  "Any resumption of enrichment and reprocessing activities
would be a further violation of Iran's agreements with the Europeans," 
said White House spokesman Scott McClellan.
     
     'MONEY COMING IN'

     NYMEX crude has gained about 5% so far in 2006 as investors pour money
into oil and other commodities such as base metals, seeking to beat the
returns available in sectors such as equities. 

     "There's a lot of money coming in and a lot of money searching for a
home," Wittner said. "Commodities are still viewed as an attractive asset
class compared to other asset classes."   

     Tuesday's rally followed a drop in crude prices on Monday, when traders
focused on warmer-than-usual weather in the US, the world's biggest oil
market, that would dent heating fuel demand. 

     The concern about Iran comes on top of an expected drop in output of
benchmark North Sea Brent crude that traders said helped support prices, and a
spell of cold weather in Japan, the world's third-largest oil consumer.

     Daily output of Brent is likely to fall almost 6% next month to 214,285
bbl, the loading program showed Tuesday. Total production is scheduled at
6,000,000 bbl over the 28-day month. 

     "With the weather still cold in other key consuming countries, notably
Japan, plus strong transport-driven demand and a number of problems that are
contributing to lower crude oil supplies, price risk looks skewed to the
upside for now," Kevin Norrish, analyst at Barclays Capital, said in a report.

		--Alex Lawler, alex_lawler@platts.com

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