Forexpros – Crude oil futures fluctuated between gains and losses in choppy trade on Monday, as traders continued to monitor tensions between Iran and the U.S. as well as developments surrounding the euro zone’s ongoing debt crisis.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD101.72 a barrel during early U.S. morning trade, easing up 0.15%.
The February contract traded in a range between USD102.14 a barrel, the daily high and USD100.86, the session’s low.
Concerns over a disruption to Iranian oil supplies lingered after Iran’s state-run Fars news agency reported Sunday that the Iranian Revolutionary Guard Corps will hold another large-scale exercise in the Strait of Hormuz and the Persian Gulf next month.
U.S. Joint Chiefs of Staff chairman General Martin Dempsey said late Sunday that Iran has the ability to block the Strait of Hormuz “for a period of time,” and that the U.S. would take action to reopen it.
Oil spent recent sessions spiking on fears that Iran may make good on threats to cut off access to the Strait of Hormuz, a narrow passageway that connects the oil-rich Persian Gulf nations with the rest of the world.
French lender Societe Generale said in a report earlier that prices could surge to as high as USD200 a barrel “for a limited time period” in the case Iran completely shuts down the key passageway.
U.K.-based Barclays offered a similar forecast, saying that, “Escalation of the situation involving Iran is likely to be the single largest source of upside risk to oil prices in the short term.”
The bank added that, “The potential closure of the Strait of Hormuz still remains the ultimate fear in the oil market.”
Meanwhile, the International Energy Agency said Friday that it could release up to 14 million barrels per day of government-owned oil stored in the U.S., Europe, Japan and other importers, a rate that could be kept up for a month.
Wall Street investment bank Morgan Stanley said that such a release is likely to limit the impact of any blockade of the Strait of Hormuz.
“If the impact is limited to 10 million barrels per day for three weeks, or 210 million barrels, this loss could be easily replaced by an SPR (strategic petroleum reserves) crude release until the Strait is reopened,” the bank said in a report.
Also Monday, German Chancellor Angela Merkel said she was optimistic that the European Union will be able to sign off its fiscal pact by the end of January. Her comments came after meeting with French President Nicolas Sarkozy in Berlin earlier.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery shed 0.33% to trade at USD112.69 a barrel, with the spread between the Brent and crude contracts standing at USD10.97 a barrel.
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