Forexpros – Crude oil futures soared on Tuesday after reports that Iran produced its first nuclear fuel rod and a plunging U.S. dollar triggered the buying.
On the New York Mercantile Exchange, light sweet crude futures for January settlement traded at USD102.61 a barrel during mid U.S. trade soaring 2.92%.
It earlier hit a daily high of USD102.86 a barrel.
Weakness in the U.S. dollar added to the bullish crude price move. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.65% to trade at 79.93.
Dollar weakness generally lifts commodity prices, as it increases their appeal as an alternative asset and makes dollar priced commodities cheaper for holders of other currencies.
The Institute for Supply Management’s U.S. factory index advanced more than expected, as well as Chinese and Indian metrics, providing bullish signals for economic growth.
The Iranian Student News Agency reported that Iran tested its first nuclear fuel rod adding to oil supply fears, while the nation warned the U.S. against sending an aircraft carrier to the Persian Gulf.
Adam Sieminski of Deutsche Bank told Bloomberg, “It looks like the U.S. economy is coming back. The upside risk for prices is greater than the downside risk.”
Meanwhile, China’s purchasing manager’s index advanced to 40.3 in December from 49 a month earlier. Readings above 50 indicate expansion adding to the bullish oil environment.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery traded higher by 3.78% to trade at USD111.28 a barrel, up USD8.61 on its U.S. Counterpart.
This nearly USD10.00 spread has been narrowing recently, but is still historically high. The two contracts traditionally trade within USD1.00 of each other.
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