Crude futures up on Israel bomb attack, weaker dollar

21 November 2012 11:36  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures strengthened on Wednesday, with ICE Brent rising by more than $1/bbl, following a bomb attack in Tel Aviv, Israel, and a weaker US dollar.

At 11:22 GMT, January Brent crude on London’s ICE futures exchange was trading at $111.15/bbl, up by $1.32/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $111.18/bbl, up by $1.35/bbl.

January NYMEX light sweet crude futures (WTI) were trading at a session high of $87.60/bbl, up by 85 cents/bbl from the previous close.

Crude futures climbed amid concerns over an escalation in the armed conflict between Israel and Gaza following a bomb attack on a bus in Tel Aviv and further airstrikes by Israel against Hamas targets in the Palestinian territory.

Fears have grown that other nations in the Middle East could be drawn into the conflict and potentially lead to disruption to oil supplies from the region which accounts for around one third of global crude and natural gas liquids production, and nearly half of global crude exports.

Prices were further buoyed by a decline in the US dollar against the euro and other leading currencies. A decline in the value of the US currency makes dollar denominated commodities such as oil more attractive to overseas investors.

Meanwhile, eurozone debt worries which contributed to marked falls in crude prices on Tuesday remained a significant driver in the market. Eurozone leaders were unable to reach an agreement in talks to grant Greece further bailout funds following a meeting in Brussels. There are concerns that the inability of eurozone leaders to agree the lease of funds could threaten the survival of the euro. 

Greece needs the next tranche of €31.5bn ($40.4bn) of aid from the International Monetary Fund (IMF), the EU and the European Central Bank (ECB) in order to avoid defaulting on its debts.

($1 = €0.78)

By: James Dennis
+65 6780 4327

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