Forexpros – Crude oil futures rose on Tuesday, climbing to a three-day high as a broadly weaker U.S. dollar and mounting fears over a disruption to Iranian oil exports boosted prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD95.03 a barrel during European morning trade, rallying 1.05%.
It earlier rose by as much as 1.15% to trade at USD95.12 a barrel, the highest since December 15.
Crude’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, declined 0.35% to trade at 80.65.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Crude prices drew additional support from the possibility that sanctions over Iran’s nuclear program will disrupt supplies from the world’s fifth-largest crude oil exporter.
Eleven countries in a coalition that includes the U.S. and European and Arab states will meet in Rome later in the day to discuss imposing tougher sanctions on the Middle Eastern country.
U.S. lender Bank of America said in a report Monday that oil prices could “surge by USD40 a barrel” if international sanctions halt supplies from Iran.
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, investors continued to monitor development surrounding the debt crisis in the euro zone. Finance ministers from the single currency bloc on Monday agreed to provide EUR150 billion in loans to the International Monetary Fund, below the EUR200 billion initially agreed upon at an EU summit earlier in the month.
Later in the day, Spain was due to auction three- and six-month government bonds, in what was being viewed as a key test of market confidence in the country’s government debt.
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.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery jumped 1.2% to trade at USD104.89 a barrel, with the spread between the Brent and crude contracts standing at USD9.77 a barrel.
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