Forexpros – Crude oil futures advanced to a three-day high in post-holiday trade on Tuesday, as mounting fears over a disruption to Iranian oil supplies drove prices higher.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD100.69 a barrel during European morning trade, climbing 1% in the first trading session of 2012. NYMEX trading remained closed on Monday due to the New Year’s holiday.
Prices earlier rose by as much as 1.2% to trade at USD100.91 a barrel, the highest since December 28.
Reports Monday that Iran had produced its first nuclear fuel rod added to ongoing concerns over a potential disruption to Iranian oil supplies.
The report came after the Islamic Republic said it had test-fired two long-range missiles over the weekend as part of an ongoing naval drill in the Strait of Hormuz.
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.
Crude prices drew additional support from a report showing that Chinese manufacturing activity returned to expansionary territory in December after contracting in November.
China is the world’s second largest consumer after the U.S. and has been the engine of strengthening demand.
Meanwhile, investors were eyeing a series of important events this month, including German and French bond auctions later in the week.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are also due to meet on January 9 in order to discuss new rules to enforce budget discipline across the European Union.
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.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery surged 2% to trade at USD109.39 a barrel, with the spread between the Brent and crude contracts standing at USD8.70 a barrel.
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