| News | Oil surge above $100 on Iran tension and eased debt woes |
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| Analysis | Crude oil surged above $100 a barrel with more than a $3 jump on unconfirmed rumors that Iran continued its military maneuvers and closed the Strait of Hormuz in the Persian Gulf where the rise was further supported by a positive opening for Wall Street. Crude oil futures for January settlement bounced to strike a fresh intraday high with the start of the U.S. session at $101.25 per barrel after news that Iran closed Strait of Hormuz and with soon after declined from the high to still trade strong around $100.20 per barrel higher by 2.47% from the opening of $97.85 and after reaching the low of $97.60 per barrel. The unconfirmed report that Iran closed the Strait of Hormuz sent a sudden shock wave in the market that the tension is indeed rising and Iran might use oil as its political weapon after recent reports this week said that military was to practice its ability to close the Gulf to shipping in one of the most important oil transit channels in the world and the news raised fears over supply especially as it comes after the IEA report and OPEC meeting tomorrow. The IEA outlook had also its mixed impact on the market as it revised lower its demand forecast for 2011 and 2012 by 160,000 and 200,000 respectively on the back of “more precarious economic backdrop” the news were not very pleasing for oil yet soon after the downside pressure also eased as IEA still sees rising demand in 2012 from levels in 2011 and with the uncertainty over supply from Iran and OPEC ahead of the meeting that further supported the spike seen for crude. OPEC is expected to announce the agreement tomorrow on a new 30 billion barrels a day production quota as the members of the cartel are still at disarray over their production quotas and with the disruption that might be something to look for tomorrow. We can still see crude fluctuating after the sharp spike yet as long as the news from the Strait of Hormuz remain unconfirmed it will give up the gains again. |
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