Forexpros – Last week saw crude oil futures post their biggest weekly gain in two months, as indications the U.S. economic recovery was gaining momentum and growing fears over a disruption to Iranian oil supplies boosted prices.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD99.86 a barrel by close of trade on Friday, rallying 6.16% over the week, the biggest weekly gain since late October.
Earlier Friday, crude prices rose to USD100.23 a barrel, the highest since December 14.
Trading volumes were thin ahead of the Christmas holiday weekend, resulting in quiet trade. The NYMEX floor session closed early ahead of Monday’s Christmas holiday.
Crude’s gains on Friday came after government data showed that U.S. new home sales rose to 315,000 in November, up 1.6% above October’s revised rate of 310,000, while durable goods orders rose a better-than-expected 3.8% in November from October.
Both reports came amid a week marked by bullish U.S. economic indicators, including a report showing that initial jobless claims fell to the lowest level since April 2008 last week.
Meanwhile, prices continued to draw support from the U.S. Energy Information Administration’s weekly supply report published Wednesday showing that U.S. crude inventories dropped by 10.6 million barrels last week, the largest weekly drawdown since the week ended February 16, 2001.
Total U.S. crude oil inventories stood at 323.6 million barrels as of last week, the lowest level since December 2008.
The U.S. is the world’s largest oil consuming nation, accounting for nearly 22% of global oil demand, according to British Petroleum Statistical Review of World Energy.
Crude prices drew additional support amid growing concerns over a disruption to Iranian oil exports after the country’s Navy chief said Iran planned to engage in naval exercises in the Strait of Hormuz, which is patrolled by ships of U.S. Navy’s Fifth Fleet.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.
Iran is the world’s fourth largest oil producer, pumping nearly 5% of the world’s oil in 2010. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.
Investors were also monitoring renewed violence in Iraq. A series of at least 14 coordinated bombings hit Baghdad on Thursday, killing at least 57 people.
The bombings come just days after the last U.S. troops left the country, renewing fears over sectarian violence between Sunni and Shia Muslim groups. Iraq pumped nearly 2.57 million barrels of oil per day last month.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery settled at USD107.98 a barrel by close of trade on Friday. The Brent contract rose 4.57% over the week, with the spread between the Brent and the crude contracts standing at USD8.12 a barrel, the smallest differential since early March.
NYMEX floor trading was to remain closed December 26 because of the Christmas holiday. Trading volumes were expected to remain light this week, as market participants tend to move to the sidelines and take time off during the last week of December.
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