Forexpros – bsp;Forexpros – Crude oil futures dropped Wednesday on U.S. government data indicating that inventories climbed more than expected and deepening euro zone debt fears adding to demand concerns.
On the New York Mercantile Exchange, light sweet crude futures for February settlement traded at USD101.86 a barrel during mid U.S. trade giving back 0.38%%.
It is trading off a two day low of USD100.58 hit earlier in the session falling by as much as 1.55%.
Strength in the U.S. dollar helped lower oil prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, advanced 0.55% to trade at 81.60.
Dollar strength generally suppresses commodity prices, as it decreases their appeal as an alternative asset and makes dollar priced commodities more expensive for holders of other currencies.
U.S. crude oil inventories climbed by 5.0 million barrels in the week ended January 6th crushing analysts expectations of a 1.0 million increase.
U.S. inventories came in at 334.6 million barrels, as of last week, above the seasonal average.
Additional pressure was placed on crude oil on the demand side after Fitch Ratings stated that the European Central Bank needed to ramp up its bail out efforts in order to save the euro.
Meanwhile, Iranian tensions are lessening as Greece, Italy and Spain are working to soften a U.K. led effort for a total ban on Iran imports. Foreign ministers are scheduled to meet on January, 23rd to discuss possible sanctions.
Iran is the world’s fourth largest producer of oil hence any sanction fears of disrupted supply added to oils recent bullish move.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery fell 0.24% to trade at USD113.00 a barrel, up USD11.14 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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