Crude Oil futures retreated Wednesday from their eight-month high reached the day before as worries over Iran tensions subsided and renewed concerns about the euro zone emerged. Crude Oil was also exhibiting a strong correlation to equity markets, which were also falling on European concerns. Light, sweet Crude for February delivery fell 55 cents, or 0.5%, to $102.41 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange rose 4 cents to $111.57 a barrel. U.S. stock markets opened lower, following the lead of European exchanges.
Since tensions between Iran and the west began rising in recent weeks, worries about the economic condition of the euro zone faded to the background–but never truly went away. On Wednesday they began to reassert themselves, with news that overnight deposits at the European Central Bank reached an all-time high–suggesting banks are more willing to park cash at the central bank than lend it to other banks. Spanish bond yields also rose on a report that said Spain’s government is considering an application for loans from the European Union’s rescue fund and the International Monetary Fund.
Though futures settled at an eight-month high Tuesday, they failed to close higher than the $103.37 intra-day mark reached Nov. 17, after Enbridge announced it would reverse the Seaway pipeline, allowing the glut of crude stored in Cushing, Okla., to reach Gulf Coast refineries. From a technical standpoint, the failure to hold the intra-day high suggests crude futures may not be poised to run higher.
EasyForexNews Research Team