Forexpros – Crude oil futures spiked above the USD101 per barrel level as the U.S. dollar weakened on the Federal Reserve’s monetary easing vow and Iranian supply worries.
On the New York Mercantile Exchange, light sweet crude futures for March settlement traded at USD100.75 a barrel during mid U.S. trade surging 1.34%.
It earlier hit a high of USD101.39 and posted a low of USD99.45 on the session.
Weakness in the U.S. dollar helped lift crude oil prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gave back 0.34% to 79.33.
Dollar weakness generally lifts commodity prices, as it increases their appeal as an alternative asset and makes dollar priced commodities less expensive for holders of other currencies.
Crude oil’s spike higher came after Fed Chief Ben Bernanke stated, “We are prepared to provide further monetary accommodation if employment is not making sufficient progress toward our assessment of its maximum level, or if inflation shows signs of moving further below its mandate consistent rate. Bond buying is an option that’s certainly on the table.”
In addition to the Fed’s vow to keep interest rates low until at least late 2014.
These statements sent the U.S. dollar lower and correspondingly lifted crude oil prices.
Meanwhile, Iran threatened to preempt the European embargo by cutting supplies internally.
The Iranian Parliament stated that they are finalizing a draft bill to stop all oil trade with Europe triggering supply fears.
Elsewhere in Greece, unsubstantiated reports that private creditors will submit a new offer with an average interest rate of 3.75% on bonds as part of a debt restructuring; added to the weak U.S. dollar environment
On the ICE Futures Exchange, Brent oil futures for March delivery advanced 1.13% to trade at USD111.11 a barrel, up USD10.36 on its U.S. Counterpart.
This over USD10.00 spread is near historic highs. The two contracts traditionally trade within USD1.00 of each other.
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