Oil rises 2 per cent on US-Iran tensions, improved demand

LONDON, Feb 11 (Reuters): Oil prices gained more than 2.0 per cent on Wednesday, buoyed by potential supply risks should tensions between the US and Iran escalate, while draws of crude from key stockpiles suggested stronger demand.

Brent crude oil futures were up $1.52, or 2.2 per cent, at $70.32 a barrel by 1320 GMT. US West Texas Intermediate crude rose $1.50, or nearly 2.4 per cent, to $65.46.

"Ongoing tensions in the Middle East continue to support prices, although so far there has been no supply disruption," said UBS oil analyst Giovanni Staunovo.

US President Donald Trump said on Tuesday he was considering sending a second aircraft carrier to the Middle East, even as Washington and Tehran prepare to resume negotiations aimed at averting a new conflict.

"While rhetoric remains belligerent at times, there are no signs, at least for now, of escalation, and the US President believes that Iran will ultimately want to strike a deal on its nuclear missile programme," PVM Oil Associates analyst Tamas Varga said in a note.

A slightly weaker dollar was helping prices higher as well. A stronger US currency hurts demand for dollar-denominated crude from foreign buyers.

Crude draws from the stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub and from Fujairah suggested a tight market, UBS' Staunovo said, which was also supporting prices.