Forexpros – Crude oil futures rose in Asian trading on Wednesday, reversing losses sustained on commitments out of Saudi Arabia to boost production to ensure that prices fall.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at USD106.58 a barrel, up 0.48% and also the session high.
The commodity hit an earlier session low of USD106.25.
Ongoing tensions between the West and Iran have sent crude skyrocketing in recent months, and with European bans on Iranian crude set to kick in July, oil has found solid support.
However, Saudi Arabian Oil Minister Ali al-Naimi on Tuesday told reporters his country could hike output by 25% to make up for shortfalls stemming from Iran and elsewhere.
The news sent oil falling as did reports that global mining giant BHP Billiton expected China’s demand for iron ore, a key component to making steel, to remains largely flat through 2020 after soaring from 2000 to 2012.
The report spooked investors on sentiment that not only would a cooler China need less oil to grow, but a cooler China may signify the world itself may grow a little less and need less manufacturing capacity out of the large Asian economy.
The U.S. economy is growing but at an arguably sluggish pace, while Europe remains mired in a debt crisis that has already thrown portions of the continent into deep recession.
Moods lifted by early Wednesday in Asian trading, however.
The dollar eased up on its rally stemming from the news, and other currencies like the euro regained footing, while crude oil jumped back up into positive territory as well.
Furthermore, yields in U.S. Treasury markets have been rising, suggesting that investors are gearing up for more growth and will demand less safe but lackluster government debt, which supported oil as well.
On the ICE Futures Exchange, Brent oil futures for May delivery were up 0.21% and trading at USD124.38 a barrel, up USD18.13 from its U.S. counterpart.
The gap in price between the two contracts is pushing close to a nearly USD20.00 all-time high and a historical spread of USD1.00.
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