Oil prices hovered above $106 a barrel Thursday in Asia as investors remain skeptical that tensions over Iran nuclear program will ease soon.
Benchmark oil for April delivery was up 28 cents to $106.44 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.46 to settle at $106.16 per barrel in New York on Wednesday.
Brent crude was up 15 cents at $124.27 per barrel in London.
Crude has risen from $96 last month to near 10-month highs because of worries a military conflict over Iran’s nuclear program would disrupt global oil supplies. The U.S. and Europe have imposed sanctions while Iran has threatened to halt crude tankers passing through the Persian Gulf.
Iran agreed Tuesday to let international nuclear inspectors into its facilities. However, diplomats said Wednesday that satellite images of an Iranian military facility appear to show trucks and earth-moving vehicles at the site, indicating an attempted cleanup of radioactive traces possibly left by tests of a nuclear-weapon trigger.
“It is extremely unlikely that this latest round of possible negotiations will fundamentally reset Iranian relations with the West,” commodities analyst Amrita Sen of Barclays Capital said in a report.
Low spare production capacity and crude inventories are also bolstering prices. According to the International Energy Agency, crude inventories in developed countries are now more than 65 million barrels below their average over the last five years and European stocks are at a 15-year low.
“It is not all ‘geopolitical risk premium’ in oil prices,” Sen said. “The lack of spare capacity and inventories is playing an equally large part.”
Signs of an improving U.S. economy have helped raise oil from $75 in October. On Wednesday, payroll provider ADP estimated companies added 216,000 workers last month. The government is scheduled to announce its February jobs figures Friday.
In other energy trading, heating oil rose 0.2 cent to $3.22 per gallon and gasoline futures added 0.6 cent to $3.29 per gallon. Natural gas fell 0.1 cent to $2.30 per 1,000 cubic feet.