Forexpros – Crude oil futures declined on Wednesday, easing off the previous session’s seven-week high as market sentiment weakened amid lingering concerns over the euro zone’s debt crisis, while mounting fears over a disruption to Iranian oil supplies limited losses.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD102.59 a barrel during European morning trade, shedding 0.35%.
It earlier fell by as much as 0.48% to trade at a session low USD102.41 a barrel. Prices rallied to a seven-week high of USD103.16 a barrel on Tuesday.
Investors turned cautious as Germany’s Treasury was set to auction EUR5 billion of 10-year government bonds later in the day.
Adding to nervousness, data released earlier in the day showed that the use of the European Central Bank’s overnight deposit facility reached a new all-time high of EUR453.1 billion on Tuesday.
The report underlined concerns over region’s banking sector, as euro zone lenders increasingly turn to the ECB as a safe-haven for extra funds.
Euro zone developments dominated trading in the oil market for the last several months of 2011, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Meanwhile, prices continued to draw support from supply disruption concerns as a result of escalating tensions between Iran and the West.
Iran’s military chief Ataollah Salehi warned the U.S. against sending naval ships back to the Persian Gulf, however Pentagon Spokesman George Little said earlier that “regularly scheduled movements” including through the Strait of Hormuz will continue, ignoring threats from Iran.
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.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery dipped 0.15% to trade at USD111.97 a barrel, with the spread between the Brent and crude contracts standing at USD9.38 a barrel.
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