On Friday crude oil for February delivery fell to a three week low after comments from EU officials signalled a six-month delay in exercising a ban on oil imports from Iran. After trading above $100 for most of the week, the forward contract slid to a weekly low of $97.70 during the last trading session.
A sharp rise in U.S. weekly crude supplies, along with an unexpected widening of the U.S. trade deficit provided profit opportunities for short positions. Threats of crude oil supplies being restricted because of a strike in Nigeria moderated the overall decline.
Prices for the week retreated more than 3.0% after reaching a high of $103.41, a level it last touched in May 2011. The decrease has brought the prices back to the levels seen at the beginning of the year. Standard and Poor’s downgrade of France’s credit rating on Friday also dampened investor hopes.
From a short-term perspective, supply disruptions eventually caused by geopolitical issues from Iran and Nigeria are expected to leave an upward bias on the price of crude oil for future delivery.
Elsewhere, Goldman Sachs raised its forecast for oil prices, citing positive economic developments in U.S. and China to be the driving factors.
