Forexpros – Crude futures fell early Monday, as markets cast aside supply fears stemming from Iran’s threats to close the Strait of Hormuz and instead sold oil on sentiment that Europe’s debt woes will mean less economic output, which will mean less demand for crude and its derivatives.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD101.28 a barrel in U.S. trading, down 0.27%.
The commodity hit a session high of USD102.14 and a low of USD101.12.
Oil prices have surged in part on fears that Iran may close the Strait of Hormuz to shipping traffic to conduct military exercises, thus crimping the world of its oil supply.
The narrow waterway connects oil-rich Persian Gulf nations with the rest of the world, and even talk of closing it ruffles feathers in energy markets globally.
Furthermore, the outlook for the U.S. economy looks brighter, with the U.S. Bureau of Labor Statistics recently reporting that December’s nonfarm payrolls rose by a net 200,000, far outpacing expectations for a gain of around 150,000.
A more robust U.S. economy will need more fuel on which to run, yet traders on Monday focused instead on Europe, where credit downgrades are possible within the coming weeks.
Fears that the European economy will drag on global growth dragged down crude prices early in the session.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.25%, trading at USD113.20 a barrel, up USD11.92 from its U.S. counterpart.
The gap in price between the two contracts hovers on the higher end between a nearly USD20.00 all-time high and a historical spread of USD1.00.
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