Forexpros – Crude futures gained Thursday, climbing back into positive territory after investors sold the commodity to take profits and invest in the dollar, which shot up on fresh European credit worries.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD99.39 a barrel in early Asian trading, up 0.03%.
The commodity hit a session high of USD99.86 and a low of USD99.16 earlier Thursday.
Iran’s threats to block the Strait of Hormuz to conduct military drills sent oil prices soaring this week, although profit taking kicked in as sentiment grew that Iran was bluffing.
Blocking the narrow waterway would not only cut off supply of oil to the West from Arab countries, but would also prevent Iran from importing the refined oil products it needs such as gasoline, since Iran is not a major refiner despite its massive crude reserves.
Furthermore, the U.S. Fifth Fleet says it won’t allow Iran to block the waterway.
“Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated,” the Bahrain-based fleet said in an e-mail to Reuters.
Meanwhile reports in Europe that banks are hoarding up on cash loaned to them by the European Central Bank weakened the euro and strengthened the dollar, the latter of which often trades inversely with oil.
The dollar was still up in Asian trading although it had tempered its gains.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% at 81.08.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.20%, trading at USD107.25 a barrel, up USD7.86 from its U.S. counterpart.
The gap in price between the two contracts hovers on the lower end between a nearly USD20.00 all-time high and a historical spread of USD1.00.
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