Forexpros – Crude oil futures traded at a seven-week high during European morning hours on Thursday, as a broadly weaker U.S. dollar and renewed fears over escalating violence in Syria and tensions with Iran reinforced geopolitical fears.
On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD90.62 a barrel during European morning trade, gaining 0.75%. Prices touched USD90.80 a barrel earlier in the session, the highest since May 30.
The August contract is due to expire at the end of Friday’s trading session.
Meanwhile, the more actively traded contract for September delivery jumped 0.85% to trade at USD90.92 a barrel.
Earlier in the day, prices rose by as much as 1% to trade at USD91.12 a barrel, the highest since May 29.
Oil’s gains came on the back of a weakening U.S. dollar, as investor sentiment strengthened, bolstering demand for higher yielding assets.
The Australian dollar hit an 11-week high against the greenback, while the dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was down 0.3% to trade at 82.83, the lowest since July 5.
Meanwhile, investors mulled over a second day of testimony on the U.S. economy and monetary policy by Federal Reserve Chairman Ben Bernanke on Wednesday.
Bernanke reiterated that the U.S. central bank was prepared to take further action to support the economic recovery if necessary. However, he failed to indicate whether the Fed will embark on a third round of quantitative easing.
Oil traders looked ahead to a raft of U.S. data later in the day, to gauge the strength of the U.S. economic recovery.
The country was to publish government data on initial jobless claims, as well as reports on existing home sales and manufacturing activity in Philadelphia. On Wednesday, official data showed that U.S. housing starts hit their highest level since October 2008 last month.
The U.S. is the world’s largest oil consumer. Worries about the U.S. economy have been dominating market sentiment in recent weeks, alongside the ongoing debt crisis in the euro zone and China’s cooling growth.
Oil futures found further support amid fresh geopolitical tensions between Israel and Iran, following a deadly bomb attack on a bus packed with Israeli tourists in a Bulgarian resort town Wednesday that killed at least six people and injured 30 others.
Israeli Prime Minister Benjamin Netanyahu blamed the attack on Iran, saying “This is an Iranian terror attack that is spreading throughout the entire world,” while adding that “Israel will respond with force.”
Concerns over escalating violence in Syria also helped underpin prices.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery rose 0.85% to trade at USD106.06 a barrel, with the spread between the Brent and crude contracts standing at USD15.14.
London-traded Brent prices rose to as high as USD106.47 a barrel earlier in the session, the highest since May 30.
Brent prices have been well-supported in recent weeks, rallying nearly 20% from the lows touched in June, amid growing concerns over tightening supplies from Norway, outages in the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
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