Forexpros – Crude futures rose in early Asian trading Wednesday, extending strong gains posted earlier in U.S. and European sessions on Iran’s warnings to the U.S. Navy and also on strong manufacturing data out of the U.S. and China.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD103.02 a barrel in early Asian trading, up 0.06%.
The commodity hit a session high of USD103.14 and a low of USD102.92.
Iran’s threats to disrupt the flow of oil from the all-important Strait of Hormuz coupled with data suggesting the U.S. and China were growing at a healthy clip served as the perfect cocktail to send oil prices skyrocketing.
Iran has threatened to close the Strait of Hormuz and conduct military drills in the past to protest sanctions from the West slapped on Tehran for allegedly building a nuclear program.
The U.S. has said its Navy won’t let Iran disrupt the flow of crude, but Iran on Tuesday threatened the U.S. Navy not to move a carrier near the strategic body of water.
“Iran will not repeat its warning … the enemy’s carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf….we are not in the habit of warning more than once,” Army chief Ataollah Salehi said, as reported by Reuters.
The Pentagon downplayed the threats and its carrier’s presence in the region, pointing out it was doing nothing new in the waters near Iran as it has for years.
Furthermore, Iran said it has tested its first nuclear fuel rod, further defiance that primed fears that oil supply disruptions will grow increasingly likely.
On the flip side of supply fears, sentiments grew that fundamental economic activity was on the rise thanks to lower-than-expected unemployment rates in Germany as well as strong manufacturing data in the U.S. and China.
In the U.S. the Institute of Supply Management’s Manufacturing Purchasing Managers Index rose to 53.9 in December from 52.7 the month before, outpacing expectations for a 53.2 reading.
In China, similar data fueled hopes that demand for manufactured goods is rising worldwide, as China produces goods not for just itself but for many countries as well.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.07%, trading at USD112.15 a barrel, up USD9.13 from its U.S. counterpart.
The gap in price between the two contracts hovers roughly midway between a USD20.00 all-time high and a historical spread of USD1.00.
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