Forexpros – Crude oil futures advanced on Friday, settling close to a two-week high as better-than-expected U.S. employment data and mounting fears over a disruption to supplies from Iran overshadowed concerns over the ongoing debt crisis in the euro zone.
On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD101.11 a barrel by close of trade on Friday, jumping 3.43% over the week.
The U.S. Department of Labor said Friday that the unemployment rate dropped unexpectedly to a two-and-a-half year low of 8.6% in November, as the U.S. economy created 120,000 new jobs.
Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy. The U.S. is the world’s largest oil consumer.
Meanwhile, crude prices continued to draw support from mounting geopolitical tensions over Iran after the U.S. and the European Union tightened their sanctions against the country on Thursday. Earlier in the week, the British embassy in Tehran was stormed during a rally to protest against sanctions imposed by Britain.
Iran Foreign Ministry said on Sunday that global oil prices would more than double if the West seriously considered blocking Tehran’s ability to export oil.
“As soon as such an issue is raised seriously the oil price would soar to above USD250 a barrel,” Foreign Ministry spokesman Ramin Mehmanparast said.
Iran is the world’s fourth largest oil producer and the second biggest exporter among OPEC members.
Crude’s gains were limited amid lingering concerns over whether the euro zone’s bailout fund, the European Financial Stability Facility, can contain the region’s debt crisis. Speculation over a potential downgrade of Spain also weighed.
The euro zone accounted for nearly 16% of global oil consumption in 2010, according to data from British Petroleum.
Prices rallied on Wednesday after six major central banks, including the Federal Reserve and the European Central Bank announced a coordinated action to enhance the capacity to provide liquidity to the global financial system.
The surprise announcement came after China said that it plans to cut bank’s reserve requirement ratios in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
China is the world’s second largest consumer after the U.S. and has been the engine of strengthening demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery settled at USD110.09 a barrel by close of trade on Friday. The Brent contract rose 2.91% over the week, with the spread between the Brent and the crude contracts standing at USD8.98 a barrel.
Wall Street investment bank Goldman Sachs said in a report earlier in the week that it expected Brent prices to rise to USD127.50 a barrel by the end of 2012 and to USD135 by the end of 2013.
The bank said that, “oil prices will continue to rise in order to slow demand growth, even in a relatively poor economic growth environment”.
In the week ahead, investors will be closely watching the ECB’s policy meeting on Thursday, amid expectations for a 0.5% rate cut by the bank. Meanwhile, European Union leaders are to hold a summit meeting to address the region’s crisis on Friday.
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