Forexpros – Crude oil futures edged lower in thin year-end trading volumes on Tuesday, amid concerns over the uncertain global economic outlook, however prices continued to draw support from the prospect of a disruption to Iranian oil supplies.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD99.50 a barrel during European morning trade, shedding 0.36%.
It earlier fell by as much as 0.48% to trade at a two-day low of USD99.38 a barrel.
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’s losses came amid lingering concerns over the threat of mass credit ratings downgrades for euro zone countries, with Standard & Poor’s 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.
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.
The euro zone accounted for nearly 16% of global oil consumption in 2010, according to data from British Petroleum.
Meanwhile, prices remained underlined amid concerns over a disruption to Iranian oil exports after the Islamic Republic launched a ten-day naval exercise in the Strait of Hormuz on Saturday.
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.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery eased up 0.15% to trade at USD108.17 a barrel, with the spread between the Brent and crude contracts standing at USD8.67 a barrel.
The gap between the two contracts has narrowed significantly since hitting a record high USD27.88 a barrel in early October amid expectations for a return of Libyan crude supplies.
According to Nuri Berruien, chairman of Libya’s state-run National Oil Corporation, the nation was now pumping “more than a million” barrels a day. Libya had been producing about 1.6 million barrels a day nationally until the outbreak of civil war earlier in the year brought a halt to nearly all oil exports.
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