Forexpros – Crude oil futures rose in Asian trading Tuesday as a rush to the dollar surging in wake of North Korean leader Kim Jong il’s death eased a bit, giving investors room to snap up attractively priced oil positions.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD94.51 a barrel early in the session, up 0.49%.
The commodity hit a session high of USD94.77 and a low of 94.03 so far on Tuesday.
News of Jong il’s death sparked a global run for dollars, especially in Asia due to uncertainty surrounding who will replace the late North Korean leader, although calm prevailed and profit-taking ensued.
A weaker greenback can lift dollar-denominated assets such as oil because they become less expensive for consumers using other currencies.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.06% at 80.90 on Tuesday.
“There was some overnight pressure in tandem with the Asian stocks down on the death of Kim Jong il, but I am not sure that the oil markets will maintain much of a North Korea risk,” Petromatrix’s Olivier Jakob said, according to Reuters.
European Central Bank officials, meanwhile, remained firm over the weekend they have no plans to directly step in and buy government bonds held from banks on the grounds that such a move would fuel inflationary pressures.
Comments like those have cemented now deeply rooted senitments that European governments must handle the debt crisis on their own and without the help of a lender of last resort, which will dampen growth and oil demand.
However, ongoing tensions in the Middle East and U.S. troop withdrawal from Iraq fanned concerns that supply disruptions could occur, which would pump up crude and offset sluggish demand out of Europe.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were up 0.41%, trading at USD104.00 a barrel, up USD9.23 from its U.S. counterpart.
The gap in price between the two contracts hovers between a nearly USD20.00 all-time high and a historical spread of USD1.00.
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