Forexpros – Crude futures erased gains on Wednesday, reversing increases stemming from optimism for the U.S. economy coupled with a new twist in the Iranian saber-rattling drama, which sparked concerns that supply will face pressure.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD101.72 a barrel in Asian trading, down 0.51%.
The commodity spiked to an earlier session high of USD102.35 and a low of USD101.61.
Consensus is building that the U.S. will see better economic days in 2012 and will require more oil to ramp up the pace and intensity of its recovery.
Iran has threatened to close the Strait of Hormuz, a narrow passage connecting the oil-rich Middle East with the rest of the world, and while markets have grown tired of those threats, new tensions have arisen between Iran and the West concerning Tehran’s plans to execute an American citizen it claims to be a spy.
Iran continues to press ahead with its nuclear program and has said it has begun enriching uranium, which spooked oil markets a little this week.
Both U.S. economic optimism and a general agreement that Iran and the West will remain at endlessly at odds sent crude spiking before profit-taking kicked in early Wednesday.
“Favorable U.S. economic guidance has taken center stage of late in the process of temporarily pushing euro zone debt issues to the backburner,” Jim Ritterbusch, president at Ritterbusch & Associates, said in a note, according to Reuters.
“Of course, the Iran factor has also facilitated some oil price strength.”
Strikes in oil-producing Nigeria coupled with production outages there are fueling new supply fears as well.
Nigeria is Africa’s largest oil producer at 1.9 million barrels per day.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery were down 0.35% and trading at USD112.83 a barrel, up USD11.11 from its U.S. counterpart.
The gap in price between the two contracts hovers on the higher end between a nearly USD20.00 all-time high and a historical spread of USD1.00.
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