Forexpros – Crude oil futures erased gains on Thursday, pulling back from a six-month high after weak Spanish and French government debt auctions underlined concerns Europe’s debt crisis was worsening.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD100.72 a barrel during U.S. morning trade, tumbling 1.84%.
It earlier fell by as much as 2.1% to trade at a daily low of USD100.03 a barrel.
Spain’s Treasury sold EUR3.56 billion of 10-year bonds at a yield of 6.97% compared with 5.43% when it auctioned debt maturing in April 2021 last month. The country had set a maximum target of EUR4 billion for the sale.
Meanwhile, France sold EUR3.33 billion of 2016 notes at a yield of 2.82% compared to 2.31% at a similar auction last month, fanning fears over sovereign debt contagion to core euro zone economies.
Following the auction, the European Central Bank resumed purchases of Spanish government debt to ease pressure on borrowing costs.
Prices found support after the U.S. Department of Labor said that initial jobless claims fell by 5,000 to hit a seven-month low of 388,000 last week.
A separate report showed that U.S. building permits rose 9.2% to 0.65 million units in October, the highest level since March 2010, while U.S. housing starts were largely unchanged, holding steady at 0.63 million.
Prices rallied to a six-month high of USD103.37 a barrel during the Asian trading session, as news of the reversal of a major U.S. oil pipeline boosted hopes that a supply glut in the U.S. will be eased.
Enbridge, Canada’s largest transporter of crude oil, said Wednesday that it planned to reverse the flow of the Seaway Crude Pipeline that moves oil from the Gulf of Mexico to Cushing, Oklahoma, the delivery point of the benchmark NYMEX oil.
The Seaway pipeline would transport up to 400,000 barrels of oil a day from Cushing to the Gulf by 2013, Enbridge added.
However, Bank of America said in a report earlier that, “In the short term, this will definitely clear some of the crude out of Oklahoma, but it may not be enough to eliminate the glut in the Midwest because output is growing by hundreds of thousands of barrels a year.”
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery plunged 2.4% to trade at USD109.19 a barrel, with the spread between the Brent and crude contracts narrowing to USD8.47 a barrel.
The gap between the two contracts is well off the record high of USD27.88 a barrel it hit in mid-October.
Forexpros
