Forexpros – Crude oil futures edged lower on Thursday, easing off an eight-month high as market sentiment weakened ahead of a French bond auction later in the day, while fears over a disruption to Iranian oil supplies continued to provide support.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD102.48 a barrel during European morning trade, retreating 0.72%.
It earlier fell by as much as 0.8% to trade at a session low USD102.39 a barrel. Prices rallied to USD103.70 a barrel on Wednesday, the highest since early May.
Investors turned cautious as France’s Treasury was set to auction up to EUR8 billion of 10 to 30-year bonds later in the day. A downbeat result was likely to fuel fears that France could lose its AAA credit rating in the coming weeks.
Euro zone developments 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.
Meanwhile, prices continued to draw support from supply disruption concerns as a result of escalating tensions between Iran and the West.
A European Union diplomat said Wednesday that EU countries had agreed on principle to launch an oil embargo on Iran, but discussion were to continue over details such as timing and implementation.
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.
Meanwhile, markets were 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 1.2 million barrels last week, while gasoline supplies were forecast to increase by 1.0 million barrels. The data was being released a day later than usual due to the New Year’s Day holiday.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories declined by 4.4 million barrels last week, while gasoline stocks rose 3.4 million barrels.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery shed 0.3% to trade at USD113.38 a barrel, with the spread between the Brent and crude contracts standing at USD10.90 a barrel.
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