Crude Oil prices spiked in mid-morning trading to their highest level in nearly eight months on reports that European Union officials agreed in principal to an embargo on Iranian oil imports, but fell back on an apparent lack of concrete details.
Futures rose 1.2% in just six minutes, rising from $102.49 to $103.74, on word that European Union officials agreed to an Iran oil ban. But futures drifted lower again after it was revealed there was no start date to the sanctions, and that the form of the sanctions were still under study. Light, sweet crude for February delivery was down 32 cents at $102.64 at 10:41 a.m., EST.
Prices for Brent crude on the ICE Futures Europe exchange rose to near two-month highs, that may have been due more to investors covering short positions rather than buying long positions.
Oil was also exhibiting a strong correlation to equity markets, which were down on European debt concerns.
Worries about the economic condition of the euro zone, which had faded to the background as tensions between Iran and the west rose in recent weeks, began to reassert themselves Wednesday, 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.
EasyForexNews Research Team