Oil prices rebounded today primarily due to geopolitical supply-side concerns. Oil climbed from the lowest price in almost four weeks as Iran said that a disruption to crude supplies through the Strait of Hormuz would cause a shock to markets that “no country” could manage”.
Also adding to supply fears is Nigeria’s main labour unions suspended protests over the removal of fuel-import subsidies.
“Supply worries in Iran and Nigeria combined with the recovering U.S. economy and demand from developing markets are driving oil prices higher,” said Christophe Bellew, a senior broker at Jefferies Bache Ltd. in London, who predicts crude prices will rise further. “It’s only the weakness of the euro that’s stopping oil from making bigger advances.”
Crude oil for February delivery rose as much as a dollar to $99.65 a barrel from an earlier low of $98.60. On Friday oil reached a four-week low of $97.69.
There will be no floor trading in New York today because of the Martin Luther King Jr. holiday.
Brent oil for February settlement was at $111.12 a barrel, up 68 cents on the London-based ICE Futures Europe exchange. The contract expires today. The more actively traded March futures rose 81 cents to $111.16 a barrel. The European benchmark contract’s premium to West Texas Intermediate futures was at $11.58, compared with a record $27.88 on Oct. 14.
The higher oil prices helped lift the Canadian dollar today. Canada is a major oil producer and hence its currency is sensitive to changes in oil prices. USDCAD fell to 1.0188 on Monday in late European trading from an earlier day high of 1.02551.