* Iran war games aim to protect nuclear facilities
* Dollar edging higher as safety sought
* Investors eye data in holiday-thin week for recovery
clues (Updates prices, dollar, adds China's Oct implied oil
demand)
By Fayen Wong
PERTH, Nov 23 (Reuters) - Oil prices rose above $78 a
barrel on Monday as heightened tension between Iran and Western
nations raised speculation over a potential supply risk,
encouraging investors to push prices higher.
Prices were also supported by a weaker U.S. dollar,
following dovish comments from U.S. central bankers and a surge
in gold to a new record after concerns over accelerating
inflation and weak economic growth prompted investors to cut
risk. Higher resource stocks helped boost Asian stocks. []
[]
U.S. crude for January delivery rose 71 cents to $78.18 a
barrel by 0416 GMT. The December contract, which expired on
Friday, settled down 74 cents at $76.72 a barrel, weighed down
by a stronger dollar and concerns about the energy demand
outlook.
London Brent crude <LCOc1> gained 75 cents to $77.95.
Iran's armed forces launched air defence war games on
Sunday to show off the country's deterrence capabilities in the
face of Western pressure over its nuclear programme, and a
cleric in the Revolutionary Guards warned the Islamic republic
would fire missiles at "the heart of Tel Aviv" if attacked.
[] []
"There's always a supply rise risk premium that can arise
from these elevated tensions in the Middle East and that is a
factor pushing up oil prices this morning," said Toby Hassall,
a commodities analyst at the Commonwealth Bank of Australia.
Iran's threats came a day after senior officials from six
world powers said they were disappointed Iran had not accepted
proposals intended to delay its potential to make nuclear
weapons, with U.S. President Barack Obama having warned that
there could be a package of sanctions against Iran within
weeks.
Thanks to a weak dollar and signs of a global economic
recovery, oil prices have gained about 75 percent so far this
year, although they are still nearly 47 percent off their high
of more than $147 a barrel in July 2008.
Still, analysts said oil prices have been trading within
the $75-$82 band of the past one month and would need a lot
more upside pressure to leap out of the $82 levels.
Barclays Capital said in a research note on Friday the
upside would also probably be capped by OPEC, which has
indicated that any quick run-up in prices is likely to be met
by a proactive approach to calm them, and until distillate
demand showed some sustained improvements.
With a raft of economic data on tap in the United States in
a holiday-thinned week, including existing home sales on
Monday, revised GDP figures on Tuesday and the minutes of Fed's
last policy meeting the day after, investors are set to
scrutinise the numbers for signs of economic activity perking
up in the world's top oil consumer.
Separately, China's apparent oil demand rose 10.3 percent
from a year earlier, its second double-digit gain since August
2006, Reuters calculations based on official data showed on
Monday. []
Money managers boosted net long crude oil positions on the
New York Mercantile Exchange in the week through Nov. 17, the
Commodity Futures Trading Commission said in a report on
Friday. []
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
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