Crude Oil Rebounds with European Equities
Crude-oil futures rebounded Monday with European equity markets as a successful auction of French Treasury bills boosted market sentiment and geopolitical tensions between Iran and the West kept oil prices well supported.
U.S. markets were closed for Martin Luther King Jr. Day. Late afternoon in London, the February Brent contract on London's ICE futures exchange was up 81 cents, or 0.7%, at $111.25 a barrel. The February contract on the New York Mercantile Exchange was trading up 96 cents, or 1%, at $99.66 a barrel.
Contracts across both sides of the Atlantic found support amid thin trading volumes due to the holiday in the U.S. On Friday, Standard & Poor's downgraded France, Austria and seven other euro-zone nations. Even so, the French government successfully sold Treasury bills Monday, reassuring investors.
"As investors try to digest the news and the downgrade from S&P, it seems like the market is moving forward toward the previous range with the possibility for WTI to test $100 a barrel this afternoon," said Myrto Sokou, research analyst at Sucden Financial.
"The base outlook for the euro zone weighs on the market, but it has been slightly overshadowed from tensions in Iran and Nigeria," Sokou said. Tensions between Iran and the West would likely keep the risk premium on the oil price at a high level, analysts said.
Earlier Monday, Saudi Arabia's Oil Minister Ali Naimi said Saudi Arabia, the world's largest oil exporter, wants oil prices to stabilize at around $100 a barrel, suggesting that Saudi Arabia would defend a higher price floor than in the past.
At 1800 GMT, the ICE's gasoil contract for February delivery was up $5.75, or 0.6%, at $958.25 per metric ton, while Nymex gasoline for February delivery was up 356 points, or 1.3%, at $2.7698 per gallon.
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