Tensions over Iran's nuclear programme and a fresh wave of sanctions against it could weigh on oil prices, while signs of improvement of the U.S. and Chinese economy have prompted recent gains,Goldman Sachs said on Wednesday.
Brent crude futures rose $4.75 a barrel on the first trading day of 2012 and were around $113 a barrel on Wednesday, compared with an intraday low of around $102 in December.
"Confidence is increasing that the impact of the European debt crisis is remaining confined to Europe," analysts David Greely and Stefan Wieler with Goldman Sachs said in a research note.
"The ECB's (European Central Bank) recent aggressive action on bank funding suggests that the ECB is and will continue to do what it takes to prevent an abrupt breakdown in the European financial and banking system," they added.
"Further, there are encouraging signs that the United States and China are proving resilient to the troubles in Europe, with economic data continuing to surprise to the upside."
They said the tension surrounding Iran, on the other hand, could be bearish for oil prices.
"As oil producers and refiners have reacted to the new U.S. sanctions against Iran and prepared for the likely implementation of a European Union embargo of Iranian oil, the escalating tensions between Iran and the West have likely been exerting a near-term negative influence on crude oil prices," the bank said.
"There is strikingly little evidence that any meaningful 'Iran premium' is being embedded in current crude oil prices."
Goldman, which has been one of the bulls on oil prices, pointed out that prices could be supported once theEU embargo on Iranian oil takes effect.
"We would expect European refineries to replace the Iranian crude with Saudi barrels, clearing the current surplus, while China absorbs the surplus of Iranian crude, in part to fill its strategic reserves," the analysts said.
"However, OPEC spare capacity is quite low, which leaves the market very vulnerable to further supply losses, with the potential for further losses particularly in Iran and Nigeria."
Brent crude futures rose $4.75 a barrel on the first trading day of 2012 and were around $113 a barrel on Wednesday, compared with an intraday low of around $102 in December.
"Confidence is increasing that the impact of the European debt crisis is remaining confined to Europe," analysts David Greely and Stefan Wieler with Goldman Sachs said in a research note.
"The ECB's (European Central Bank) recent aggressive action on bank funding suggests that the ECB is and will continue to do what it takes to prevent an abrupt breakdown in the European financial and banking system," they added.
"Further, there are encouraging signs that the United States and China are proving resilient to the troubles in Europe, with economic data continuing to surprise to the upside."
They said the tension surrounding Iran, on the other hand, could be bearish for oil prices.
"As oil producers and refiners have reacted to the new U.S. sanctions against Iran and prepared for the likely implementation of a European Union embargo of Iranian oil, the escalating tensions between Iran and the West have likely been exerting a near-term negative influence on crude oil prices," the bank said.
"There is strikingly little evidence that any meaningful 'Iran premium' is being embedded in current crude oil prices."
Goldman, which has been one of the bulls on oil prices, pointed out that prices could be supported once theEU embargo on Iranian oil takes effect.
"We would expect European refineries to replace the Iranian crude with Saudi barrels, clearing the current surplus, while China absorbs the surplus of Iranian crude, in part to fill its strategic reserves," the analysts said.
"However, OPEC spare capacity is quite low, which leaves the market very vulnerable to further supply losses, with the potential for further losses particularly in Iran and Nigeria."
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