Forexpros – Crude oil futures reversed earlier losses in Asian trading on Wednesday, brushing off declines stemming from the Standard & Poor’s ratings agency’s threats to downgrade a key financial assistance fund in Europe.
Tensions between Iran and the West fueled gains as well.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at USD101.44 a barrel early in Wednesday’s session, up 0.15% and reaching session highs in the process.
Standard & Poor’s on Monday warned 15 European countries they were facing downgrades, six of which were standing to lose their top-notch AAA ratings, which would include Germany, France, the Netherlands, Austria, Finland and Luxembourg.
A day later on Tuesday in the U.S., Standard & Poor’s hit the wires again warning the euro zone’s European Financial Stability Facility, an emergency fund, could see a downgrade as well, which sent oil prices falling at first.
Markets later grew faithful Europe will work out its problems and are now looking ahead to Wednesday in the U.S. for key data.
The U.S. Energy Information Administration will release crude and gasoline inventory figures, and any indications that demand is spiking above expectations will send crude rising.
Rising oil prices may fuel inflationary concerns, which could rattle currency markets as well, especially the dollar.
The U.S. dollar slipped as oil rose, with the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, sliding 0.15% to trade at 78.52.
Furthermore, tensions remain high between Iran and the West, as the U.S. and its European allies toughened sanctions on the Middle Eastern country on accusations of pursuing a nuclear program.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for January delivery rose 0.06% to trade at USD110.75 a barrel, up USD9.31 on its U.S. counterpart.
The nearly USD10.00 gap is high, as the two contracts historically have traded within USD1.00 of each other.
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