Forexpros – Crude oil futures rose above USD100-a-barrel in thin year-end trading volumes on Tuesday, as market sentiment improved after data showed U.S. consumer confidence rose to an eight-month high in December.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD100.53 a barrel during U.S. morning trade, gaining 0.68%.
It earlier rose by as much as 0.8% to trade at USD100.67 a barrel, the highest since December 13.
With markets in London remaining closed for an extended holiday break and most investors already away on year-end leave, trading volumes were low, resulting in subdued trade.
Crude prices added to gains after the Conference Board said its index of U.S. consumer confidence rose to 64.5 in December from a reading of 55.2 in November. Analysts had expected the index to rise to 58.2.
The U.S. is the world’s largest oil consuming nation, accounting for nearly 22% of global oil demand, according to British Petroleum Statistical Review of World Energy.
Meanwhile, lingering concerns over a disruption to oil supplies from the Middle East provided further support as investors monitored developments surrounding a ten-day Iranian naval exercise launched on Saturday in the Strait of Hormuz.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.
Iran is the world’s fourth largest oil producer, pumping nearly 5% of the world’s oil in 2010. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Adding to concerns, Syrian Oil Minister Sufian Alao said on Saturday that his country’s oil production had fallen by about 30% to 35% as a result of sanctions imposed on Syria over its nine-month crackdown on anti-government protests.
However, gains were capped amid ongoing concerns over the threat of mass credit ratings downgrades for euro zone countries.
Ratings agency Standard & Poor’s has yet to announce if it will cut ratings on any of the 15 countries it has on credit watch negative. Two independent European government sources said Friday that S&P was not expected to release its verdict on euro zone debt ratings until January.
Meanwhile, investors were eyeing Italian three and ten-year bond auctions later this week. The yield on Italy’s ten-year bonds rose to as high as 7.13% in early European trade, topping the critical 7% threshold widely viewed as unsustainable in the long-term.
Euro zone developments have dominated trading in the oil market for the last several months, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 0.45% to trade at USD108.47 a barrel, with the spread between the Brent and crude contracts standing at USD7.94 a barrel.
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