Forexpros – Crude oil futures added to strong gains from the previous session on Wednesday, rallying to a one-week high as a broadly weaker U.S. dollar and growing fears over a disruption to global supplies boosted prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD98.20 a barrel during European morning trade, rallying 1%.
It earlier rose by as much as 1.3% to trade at USD98.49 a barrel, the highest since December 14.
Crude’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, declined 0.5% to trade at 79.77, the lowest since December 12.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Appetite for riskier assets strengthened ahead of the European Central Bank’s first offer of three-year loans later in the day.
Crude prices drew additional support from the possibility that sanctions over Iran’s nuclear program will disrupt supplies from the Middle Eastern country.
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.
Investors were also monitoring social unrest in Kazakhstan’s oil-rich western province after at least 15 people were killed in the state’s deadliest riots in decades. The country’s crude production is estimated at around 1.6 million barrels per day.
Meanwhile, markets were also awaiting key weekly government data on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The report was expected to show that U.S. crude oil stockpiles fell by 2.4 million barrels last week, while gasoline supplies were forecast to increase by 1.0 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories fell by 4.57 million barrels last week, while total gasoline supplies declined by 0.39 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 0.53% to trade at USD107.30 a barrel, with the spread between the Brent and crude contracts standing at USD9.10 a barrel.
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