Forexpros – Crude futures fell Wednesday, erasing strong gains made in wake of Iran’s threats to cut off the flow of oil through the Strait of Hormuz.
Strong consumer confidence numbers out of the U.S. helped fuel an earlier rally as well, sending crude futures well above $101.00 barrel before profit-taking kicked in.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD101.17 a barrel in early Asian trading, down 0.17%.
The commodity hit a session high of USD101.36 and a low of USD101.01 earlier Wednesday.
Iran, bracing for potential sanctions from the West for allegedly developing a nuclear program, threatened to conduct military exercises in the Strait of Hormuz, a narrow waterway connecting oil-rich countries in the Persian Gulf with the rest of the world, potentially cutting off the flow of tankers in the process.
Syria meanwhile said over the weekend oil production had fallen by up to 35% as a result of sanctions imposed on the country for its crackdown on anti-government protests.
In the U.S., meanwhile, the Confidence Board reported that its consumer confidence index came to 64.5 in December, up from 55.2 in November and well above market forecasts for 58.2.
Fears of supply disruptions coupled with sentiment that the U.S. economy is getting stronger and will require more oil to fuel its growth brought out the earlier buyers.
“The geopolitical fear premium with the Iran comments and also the U.S. consumer sentiment rising to an eight-month high make it hard to be short oil during this holiday week,” said Phil Flynn, analyst at PFGBest Research in Chicago, according to Reuters.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were up 0.02%, trading at USD109.05 a barrel, up USD7.88 from its U.S. counterpart.
The gap in price between the two contracts hovers towards the lower end between a nearly USD20.00 all-time high and a historical spread of USD1.00.
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