Forexpros – Crude oil futures were up for a second day on Thursday, as hopes for a successful Greek debt swap deal later in the day boosted sentiment, while traders continued to monitor growing tension surrounding Iran’s nuclear program.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD106.63 a barrel during European morning trade, gaining 0.45%.
It earlier rose by as much as 0.65% to trade at a two-day high of USD106.86 a barrel.
Market sentiment firmed up after reports on Wednesday that a number of major European financial institutions had signed up to the bond swap deal, which is aimed at writing down 53.5% of the country’s EUR177 billion debt.
The swap is vital for Greece to cut its debt and secure a bailout of EUR130 billion. Without the aid package, Greece could potentially default on its debt later this month.
The news prompted investors to move in to riskier assets, such as stocks and commodities and shun the relative safety of the U.S. dollar. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.1% to trade at 79.65.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
Prices received another boost from a report in the Wall Street Journal saying that the Federal Reserve was considering a new type of mortgage and Treasury bond-buying program, also known as quantitative easing, to help stimulate the U.S. economy.
BNP Paribas said in a report earlier that QE 2.5 or QE 3-lite “in the next two or three months is possible.”
Meanwhile, oil prices continued to draw support from concerns over a potential disruption to oil supplies from Iran and worries over its nuclear program.
The Associated Press reported earlier that satellite images of Iran’s military complex in Parchin appear to show trucks and earth-moving vehicles, indicating an attempted cleanup of radioactive traces possibly left by tests of a nuclear-weapon trigger.
On Tuesday, Iranian officials said they will allow United Nation nuclear inspectors to visit the previously off-limits military complex in Parchin.
Two people with knowledge of the matter said the crews at the Parchin military site may be trying to erase evidence of tests of a small experimental neutron device used to set off a nuclear explosion.
Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.
Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery was up 0.53% to trade at 124.78 a barrel, with the spread between the Brent and crude contracts standing at USD18.15.
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