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Oil steadies above $110 per barrel

27 September 2012, 16:09

London -  Brent futures held steady above 110 dollars per barrel on Thursday on renewed worries of supply disruptions from the Middle East.

The escalating euro zone debt crisis reinforced oil demand growth concerns and capped the gains.

Front-month Brent crude rose 11 cents to 110.15 dollars a barrel, partly recouping the previous session's losses, while U.S. oil gained 22 cents to 90.20 dollars.

"There is still uncertainty over the euro zone crisis even though policymakers are putting in a lot of effort to deal with it," said Ken Hasegawa, a commodity sales manager with Newedge in Tokyo.

The geopolitical worries in the Middle East, while have been around for a long, long time, still continue to support prices.

There is about a 20 dollar premium on Brent prices because of the tensions in the Middle East over Iran's disputed nuclear programme, Hasegawa said.

“Without that, a fair value for the contract is between 80 dollars - 90 dollars a barrel,” he said.

Iran is under threat of military action from "uncivilized Zionists," a clear reference to Israel, Iranian President Mahmoud Ahmadinejad said in a speech before the U.N. General Assembly.

He also said that such threats from big powers are designed to force nations into submission.

Based on technical, Brent is expected to trade between a low of 109 dollars and a high of 111.50 dollars a barrel in the next 24 hours, Hasegawa said.

U.S. oil is relatively weaker because it slipped below its 100-day moving average of 90.27 dollar in the previous session.

The U.S. contract may fall to Wednesday's low of 89 dollars, with a possibility of slipping further to 88.50 dollars, with an upside capped at 91.50 dollars.


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