Crude Oil Falls on Reduced Iran Concern

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Oil declined for the first time in seven days as a surge in the European Central Bank’s balance sheet to a record highlighted the growing risks of the region’s debt crisis.

Oil declined for the first time in seven days as a surge in the European Central Bank’s balance sheet to a record highlighted the growing risks of the region’s debt crisis.

Futures dropped as much as 1.4 percent after the ECB lent financial institutions more money last week in an attempt to keep credit flowing. The European single currency tumbled to the lowest level since January against the dollar, curbing investor demand for commodities. Oil also decreased on reduced concern that Iran will block the Strait of Hormuz.

“The biggest news right now is that the euro is coming in pretty strongly,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “It was time for a correction after rising for six days.”

Crude oil for February delivery decreased $1.06, or 1 percent, to $100.28 a barrel at 10:47 a.m. on the New York Mercantile Exchange. Earlier, prices touched $99.91 a barrel. Futures have climbed 9.7 percent this year, extending last year’s advance of 15 percent.

Brent oil for February settlement fell 78 cents, or 0.7 percent, to $108.49 a barrel on the London-based ICE Futures Europe exchange. The European contract’s premium to crude in New York was $8.21 a barrel, up from $7.93 at yesterday’s close, the smallest differential based on settlement prices since Jan. 20.

New York oil prices surged 1.7 percent to $101.34 yesterday, the highest settlement since Nov. 16, during a period of slow trading. Volume was 167,547 on Dec. 23, the lowest level since Dec. 26, 2008, and down 73 percent from the average of the past three months. Open interest was 1.31 million contracts.

‘Exaggerated’ Move

“The significant rally yesterday was probably exaggerated because of low volume,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Lending to euro-area banks jumped 214 billion euros ($280 billion) to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said in a statement today. Its balance sheet increased 239 billion euros to 2.73 trillion euros, it said.

The 17-nation currency fell against the dollar as concern increased that the region’s sovereign-debt crisis will reduce economic growth in the region. The euro decreased as much as 1 percent to $1.2943.

About 15.5 million barrels of oil a day, or a sixth of global consumption, passes through the Strait of Hormuz between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department. Iran’s navy started a 10-day exercise east of the passage that involved the use of submarines, ground- to-sea missile systems and torpedoes, Press TV said Dec. 24.

Bloomberg

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3 responses to “Crude Oil Falls on Reduced Iran Concern”

  1. The reason the price fluxed like it did was the 2 facts not mentioned in this article.. 1 The Saudis and the gulf states have stepped up to bat and will cover Iran’s oil when the embargo goes into place against Iran, hopefully at the end of Jan, coinciding with sanctions against the central bank we passed and are coming. 2. After the stupid threat from Iran yesterday about closing the straits the US 5th fleet responded with No, you wont, just try it.. It will take less than 72 hours to smash that air force, navy and air defenses..Then we can take out the nuclear program and the regime at our leisure over a couple weeks. The green movement better get ready to move, your going to get a 2nd chance to get your country back.

  2. The reason the price fluxed like it did was the 2 facts not mentioned in this article.. 1 The Saudis and the gulf states have stepped up to bat and will cover Iran’s oil when the embargo goes into place against Iran, hopefully at the end of Jan, coinciding with sanctions against the central bank we passed and are coming. 2. After the stupid threat from Iran yesterday about closing the straits the US 5th fleet responded with No, you wont, just try it.. It will take less than 72 hours to smash that air force, navy and air defenses..Then we can take out the nuclear program and the regime at our leisure over a couple weeks. The green movement better get ready to move, your going to get a 2nd chance to get your country back.

  3. The reason the price fluxed like it did was the 2 facts not mentioned in this article.. 1 The Saudis and the gulf states have stepped up to bat and will cover Iran’s oil when the embargo goes into place against Iran, hopefully at the end of Jan, coinciding with sanctions against the central bank we passed and are coming. 2. After the stupid threat from Iran yesterday about closing the straits the US 5th fleet responded with No, you wont, just try it.. It will take less than 72 hours to smash that air force, navy and air defenses..Then we can take out the nuclear program and the regime at our leisure over a couple weeks. The green movement better get ready to move, your going to get a 2nd chance to get your country back.

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