Forexpros – bsp;- Crude oil futures bounced from nearly a month low as Iran warned it may disrupt oil supplies in the Strait of Hormuz resulting in a shock no country could manage .
On the New York Mercantile Exchange, light sweet crude futures for February settlement traded at USD99.86 a barrel during mid U.S. trade bouncing 0.99%.
It earlier climbed to USD99.97 nearly cracking the psychological critical USD100.00 per barrel
Slight weakness in the U.S. dollar helped support oil prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.08% to trade at 81.66.
Dollar weakness generally lifts commodity prices, as it increases their appeal as an alternative asset and makes dollar priced commodities less expensive for holders of other currencies.
British foreign secetary William Hague stated that he believes the European Union would agree on tough new sanctions against Iran later in the month.
Iran countered by issuing strong warnings that any disruption of supply in the Strait of Hormuz would result in major worldwide issues.
Iran is the world’s fourth largest producer of oil hence when embargo rhetoric increases supply concerns lift prices.
Meanwhile, Nigeria’s labor unions suspended protests after President Goodluck Jonathan announced that oil prices will come down by nearly 31%.
Christopher Bellew of Jeffries Bache explained to Bloomberg, “It’s only the weakness of the euro that’s stopping oil from making bigger advances. Supply worries from Iran and Nigeria combined with the recovering U.S. economy and demand from developing markets are driving oil prices higher.”
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery climbed 0.97% to trade at USD111.42 a barrel, up USD11.56 on its U.S. Counterpart.
This greater than USD10.00 spread is near historic highs. The two contracts traditionally trade within USD1.00 of each other.
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