CRANBURY, N.J. (DTN) — New York Mercantile Exchange nearby delivery oil futures rallied in overnight trading following Monday’s federal holiday in observance of Martin Luther King Jr. Day on optimism for the U.S. economy in 2012 and growing expectations that China’s central government will implement stimulus measures to spur economic growth.

   The market view that emerged earlier this month gained currency after China reported annualized fourth quarter 2011 Gross Domestic Product growth at 8.9%, which was greater than anticipated. Estimates peg Chinese 2011 GDP growth at 9.0% while slipping to 8.5% this year.

   In 2011, China took several steps to rein in inflation, including interest rate hikes and requirements that banks hold greater reserves, both aimed at reducing loans that fueled speculative growth in housing. Some analysts expected the Chinese economy to have a hard landing, sparked by an inflated real estate market and drop in exports amid the European Union’s debt problems and austerity measures. Others, including global political risk firm Eurasia Group President Ian Bremmer, expect China to engineer a soft landing, in which Beijing maintains economic growth, albeit at a slower pace.

   The U.S. dollar weakened while the euro surged, climbing despite a series of credit downgrades for nine European Union countries issued by Standard and Poor’s on Friday (1/13) over high debt and government policy seen lacking the ability to successfully overcome structural issues in the EU. Following the country downgrades, which included France losing its AAA+ rating while Spain and Italy were each downgraded by two notches, S&P lowered the credit rating of Europe’s rescue fund from AAA+ to AA+.

   The overnight rally came despite the end of strikes in Nigeria, a member of the Organization of the Petroleum Exporting Countries, with unions there late last week threatening to shut down the African nation’s oil production. The union called off strikes protesting the end of fuel subsidies after Nigerian President Goodluck Jonathan offered a compromise, subsidizing roughly 33% of fuel costs.

   NEW YORK (DTN) — New York Mercantile Exchange oil futures turned higher early Thursday along with a relief rally for equities and the euro after Spain and Italy held successful bond auctions.

   Spain sold twice the targeted debt planned while Italy met its target, prompting yields on Italian, Spanish and French bonds to fall. The response to the auctions showed strong investor interest, which comes as a relief for the market that has become accustomed to bad news regarding the euro zone sovereign debt crisis.

   The euro rose while the dollar fell, which is bullish for oil prices as investors use oil to bet against the greenback. The European Central Bank also held interest rates steady and investors are now focusing on bullish issues such as U.S. economic optimism and risks to foreign oil supply.

   Meantime, a fourth day of nationwide strikes in Nigeria added to the tension between Iran and the West. News reports said tens of thousands of Nigerians stopped work and took to the streets across the nation, protesting a surge in gasoline prices after the government removed fuel subsidies.

   The country’s largest oil workers union had threatened to shut down crude oil production as part of the strike but it’s not clear that has happened yet. Such a move would escalate the issue into a crisis for the global oil market since most of Nigeria’s 1.8 million bpd crude exports go to Europe and the U.S. East Coast.

   On Iran, Japan pledged today to buy less Iranian oil, boosting a campaign by the U.S. to sanction Iran over its nuclear program. The news followed a meeting between U.S. Treasury Secretary Timothy Geithner and Japan’s Finance Minister Jun Azumi.

   Geithner is on a tour of Asia to win support for expanded sanctions.

Asia gets most of Iran’s 2.2 million bpd oil exports, with roughly 425,000 bpd going to Europe.

   The European Union is expected to ban imports of Iranian oil later this month despite a threat by Tehran to block the Strait of Hormuz, a key chokepoint that handled 17 million bpd or 19% of global supply in 2011, according to the U.S. Energy Information Administration.

   On Wednesday, oil futures fell after data showed huge builds for U.S.

oil inventories while German growth rate fell 0.25% during the fourth-quarter.

   NEW YORK (DTN) — New York Mercantile Exchange oil futures were lower early Wednesday as rising domestic oil stocks and worries about slowing economic growth in Germany trumped risks to supply from Iran and Nigeria.

   Germany’s statistics office said initial estimates show the economy contracted about 0.25% during the fourth quarter of 2011 compared with the prior three months. During all of 2011, however, Germany’s gross domestic product expanded 3%, slowing from 3.7% for 2010 because of the euro zone debt crisis.

   Analysts speculated the economy may also shrink during the current quarter, which would technically constitute a recession in Europe’s largest economy. However, the gloomy outlook was tempered by higher than expected investor interest in German bonds earlier today.

   The euro plunged on the back of the German growth data while the dollar rose, adding pressure on oil and equities. On Wall Street, major stock futures are down, tracking falling European bourses. Oil and the dollar typically trade inverse to each other.

   Oil prices were further pressured by data released late Tuesday by the American Petroleum Institute showing U.S. crude inventories climbed by 397,000 bbl during the week-ended Jan. 6. Gasoline stocks surged 1.9 million bbl while distillate fuels added 846,000 bbl.

   The U.S. Energy Information Administration is scheduled to release its weekly supply data at 10:30 AM ET.

   On Iran, a senior nuclear scientist was killed in Tehran today by a bomb fixed to his car and Iran is blaming its foreign enemies for the incident.

The circumstances of the death remain unclear, but analysts said Iran could retaliate.

   Iran already has threatened to block oil shipments through the Strait of Hormuz if the European Union decides to impose sanctions on its oil exports later this month as widely expected.

   EU foreign ministers will discuss the issue on Jan. 23, and an official decision could be announced by Jan. 30. U.S. Treasury Secretary Timothy Geithner is currently on a tour of Japan and China, trying to get them to join the ban on Iranian oil. Most of Iran’s 2.2 million bpd in oil exports went to Asia in 2011, according to the EIA.

   In Nigeria, a nationwide strike entered its third-day today and tensions are escalating after the country’s biggest oil workers union said it will shut down oil production and export terminals.

   Nigeria exported 1.8 million bpd of crude in 2010 mostly to the U.S. and Europe, according to EIA. Concerns over supply from Africa’s top producer could support oil prices.

   NEW YORK (DTN) — New York Mercantile Exchange oil futures rallied early Tuesday along with rising equities while the dollar fell to a two-day low, with investors becoming less risk averse.

   February crude futures posted a three-session high while the products contracts rallied to multi-week highs on their respective spot continuation charts.

   The broader market’s rally was driven largely by data from Beijing, with China’s December trade surplus coming in wider than expected. The data shows import growth sharply slower, suggesting a soft rather than a hard landing for the economy.

   As a result, China is likely to ease its monetary policy, which would be bullish for commodities such as oil, analysts said. Investors are also optimistic about U.S. growth prospects, and what’s expected to be positive quarterly corporate earnings along with comments by leaders from French and Germany that they’ve made progress in addressing euro zone debt crisis.

   Oil futures were further boosted by tensions between Iran and the West as well as the rising turbulence in Nigeria. The European Union today said they will include Iran on its agenda for Jan. 23. The EU plans to discuss and potentially approve a French proposal to ban Iranian oil imports as part of tougher sanctions against Tehran for pursuing nuclear weapons development.

   Diplomats last week said the EU has agreed in principle to impose the ban, but have yet to agree on a start date. Iran has threatened to block oil shipments transiting the Strait of Hormuz if the EU goes ahead with the ban.

   Meanwhile, a nationwide strike in Nigeria to protest the removal of fuel subsidies posed a risk to that country’s oil supply. So far there have been no disruptions to trade from Africa’s top oil producer directly linked to the strikes, but some analysts said exports will likely be impacted if the work stoppage continues.

   Separately, Shell Nigeria, the local arm of Royal Dutch Shell Group, declared a force majeure last week on its Bonny Light crude exports after sabotage resulted in a leak on its export pipeline.

   The oil gains come ahead of the release of a U.S. weekly inventory report due out later in the day by the American Petroleum Institute, with the Energy Information Administration’s data due out Wednesday.

NEW YORK (DTN) — New York Mercantile Exchange oil futures were shallowly higher early Thursday amid rising tension between Iran and Western powers over Iranian threats to close a major oil route in the Middle East. The upside for oil was, however, capped by a stronger dollar.

   The latest flashpoint started Tuesday when Iran’s Vice President Mohamed Reza Rahimi threatened to close the Strait of Hormuz, cutting off oil exports from Mideast countries, if the European Union agrees next month to implement a French proposal to ban oil imports from Iran. The threat coincided with a 10-day Iranian naval war game at Hormuz that started Saturday (12/24).

   Iran’s navy chief, Adm. Habibollah Sayyari, reiterated those threats on Wednesday, saying Iran can easily disrupt supplies of 15.5 million bbl that are shipped to world markets every day though that waterway.

   The comments prompted a strong pushback from the Pentagon. Lt. Rebecca Rebarich, a spokeswoman for the 5th Fleet based in Bahrain, said any disruption at the strategic waterway “will not be tolerated,” adding the U.S. Navy is “always ready to counter malevolent actions to ensure freedom of navigation.”

   Earlier today, a U.S. aircraft carrier conducted “a routine transit through the Strait of Hormuz,” the U.S. military said. France also warned Iran against disrupting traffic through the waterway, which is the world’s busiest oil tanker route that links the Persian Gulf to the Gulf of Oman, from where shipments go to world oil markets.

   On U.S. supply, traders are trying to figure out whether federal data due out this morning will be bearish as reported late Wednesday by the American Petroleum Institute. Analysts had expected to see stock draws across the board for the week-ended Dec. 23 but the API data showed across-the-board builds, with crude stocks up a whopping 9.6 million bbl for the week.

   The Energy Information Administration is scheduled to release its weekly inventory data at 11:00 AM ET.

   Meanwhile, the euro fell to its lowest level versus the dollar since September 2010 this morning after an Italian bond auction attracted less than expected interest from investors, though bond yields fell. The dollar index, which measures the greenback against six major world currencies, rose to the highest level since Jan. 11, with a stronger dollar bearish on oil prices.

NEW YORK (DTN) — New York Mercantile Exchange oil futures were shallowly lower early Wednesday, with the crude contract snapping a six-session rally as fears over supply disruption eased after analysts dismissed Iran’s threat to close the Strait of Hormuz as hollow-based saber rattling.

   Iran on Tuesday threatened to block oil flows through the four-mile waterway at the mouth of the Persian Gulf that the Energy Information Administration says handles 15.5 million bpd or a sixth of global consumption if Western powers ban its oil next month as expected.

   The threat coincided with a 10-day Iranian naval war game at Hormuz that started Saturday (12/24). However, analysts said Iran is unlikely to make good on the threat because blocking the waterway could cause as much economic hardship to Iran as European importers of oil from that country.

   Europe imports about 450,000 bpd of Iran’s 3.6 million bpd total output, with most of those imports going to Greece, Italy and Spain. The EU plans to meet at the end of January 2012 to decide whether to go forward with a French proposal for an embargo on Iran’s oil. The United States has said it will join the EU in the ban and has called on Japan to do the same.

   However, Iran would still continue to export its oil supply to Asia. In 2010, the country exported 2.2 million bpd of crude, mostly to China, India and South Korea, according to the EIA.

   Moreover, top producer Saudi Arabia and its Arab Gulf allies are likely to boost oil exports to cover any shortfall from Iran. The EIA earlier this month projected the Organization of Petroleum Exporting Countries will have a spare capacity of about 4.1 million bpd by the first quarter of 2012, as Libyan production capacity comes back on line.

   The downside for NYMEX oil futures was, however, curbed by a return to risk trade, with investors quitting the dollar and moving to equities. The dollar fell versus the euro and five other currencies while U.S. stock futures tracked EU bourses higher after a successful Italian bond auction.

Trade volume is expected to be thin during regular session.

   Stock markets have been firm this holiday season partly due to U.S.

economic optimism, with recent data signaling the economy recovering while euro zone leaders and central bankers continue to fight the region’s debt crisis.

   On U.S. supply, analysts expect to see draws for domestic crude and product inventories for the week-ended Dec. 23. The American Petroleum Institute is scheduled to release its weekly data later today while the EIA will issue its data tomorrow.

   NEW YORK (DTN) — New York Mercantile Exchange oil futures were shallowly mixed with an upside bias early Tuesday as the U.S. dollar eased ahead of fresh industry data that are expected to provide signal the U.S.

economy is improving.

   On Wall Street, key U.S. stock markets were also shallowly mixed while German and French bourses gained in light trade after the three-day Christmas holiday weekend. London markets remained closed for a public holiday.

   Later today, both the Case-Shiller home price index for October and the Conference Board’s consumer confidence index for December are scheduled for release and should build on the story of a recovering U.S. economy, an outlook that could further boost oil demand growth in 2012.

   Crude futures rose last week on U.S. economic optimism, data showing a steep weekly drop in domestic oil stocks and threats to foreign crude supply. Heating oil eased on mild weather while RBOB spiked amid talk of tightening supply in the Northeast.

   Analysts fear oil flow could be disrupted by rising violence in Iraq, Syria, Yemen and Nigeria. Also, Iran’s navy started a 10-day war game on Saturday in the Strait of Hormuz, which is a major export gateway for crude oil from Persian Gulf.

   Technically, the trio of NYMEX oil futures contracts continued to show short-term uptrend. With spot-month NYMEX crude back up to around $100 bbl, speculators reduced their net-long positions in oil futures for the week-ended Dec. 20, according to the Commodity Futures Trading Commission’s Commitment of Traders’ report.

   Trading volume should be light this week as many traders usually take vacations over Christmas and New Year. Markets were closed Monday for Christmas

NEW YORK (DTN) — New York Mercantile Exchange oil futures were shallowly mixed during overnight trade ahead of data on November consumer spending and new home sales that are expected to provide further evidence that the broader U.S. economy is recovering.

   On Wall Street, major stock indices were higher ahead of their open while the dollar eased, boosting crude oil prices. Investors were encouraged by a deal in Congress late Thursday to extend a payroll tax cut for two months.

   Trading volume is expected to be light today through next week as many investors usually take vacations over Christmas and New Year. Markets are closed Monday for Christmas and regular trade will be abbreviated today.

   Investors are optimistic about the economy as recent data suggested the labor and housing sectors are stabilizing. The number of people filing claims for unemployment benefits dropped last week to the lowest level since April 2008, according to the Labor Department.

   Thursday’s data from both the Conference Board and the University of Michigan also showed U.S. consumer confidence climbed in November, with the bullish jobs data and rising sentiment overshadowing the Commerce Department’s downward revision of third-quarter U.S. economic growth estimate to 1.8% from 2%.

   Oil futures were further buoyed by geopolitical threats to foreign crude supply, with tensions rising between Iran and the West over Tehran’s nuclear ambition. The U.S. and Europe want to ban Iran’s oil imports and want other nations such as Japan to do the same.

   Elsewhere, there’s also growing instability in Iraq, Egypt and Syria, which are all oil producers and, in the case of Egypt, controls the gateway to supplies going to Europe.

   Meantime, midweek federal data showed domestic crude stocks plunged 10.6 million bbl last week while U.S. gasoline stocks tumbled 412,000 bbl and distillate fuel stocks dropped 2.4 million bbl.

   NEW YORK (DTN) — New York Mercantile Exchange oil futures edged up for the fourth straight day in choppy overnight trade ahead of a raft of U.S.

data that are expected to signal an improvement in the broader economy.

   Weekly U.S. jobless claims are due out just before the open of regular trade while the University of Michigan’s consumer confidence figures are expected out a few hours later.

   Trade volume is light ahead of Christmas weekend and commodities are largely tracking equities higher while the U.S. dollar is down for the second straight session.

   The rally across markets is also part of holiday cheer, say analysts, boosted further by recent upbeat U.S. housing data and a decision by the European Central Bank yesterday to offer banks in the euro zone “cheap money.”

   For the oil market, prices are boosted not only by rising investor sentiment but also due to supply concerns and rising geopolitical tension.

   On the supply front, the U.S. Energy Information Administration’s data yesterday showed domestic crude stocks plunged 10.6 million bbl last week while U.S. gasoline stocks tumbled 412,000 bbl and distillate fuel stocks dropped 2.4 million bbl.

   On the geopolitical front, the Obama administration said yesterday that the United States will join the European Union in banning oil from Iran because of Tehran’s nuclear ambition. The U.S. also called on Japan to reduce its oil imports from Iran.

   There’s also growing instability in Kazakhstan, Iraq, Egypt and Syria, which are all oil producers and, in the case of Egypt, controls the gateway to supplies going to Europe.

   In Nigeria, Shell Nigeria, the local unit of Royal Dutch Shell, said yesterday that it had shut-in its crude oil production there following a leak on its export pipeline.

NEW YORK (DTN) — New York Mercantile Exchange oil futures are rallying after the open of regular trade this morning, with the advance driven largely by U.S. economic optimism and concerns about supply.

   Trade volume remains thin ahead of the Christmas holiday and traders are cautious ahead of federal data on weekly inventories due at 10:30 AM ET, which is expected to show draws for crude.

   Oil tracked equities higher Tuesday after U.S. housing starts rose in November and data showed business confidence surged in Germany. The rally extended early this morning after the European Central Bank said it will pump $645 billion into the market by offering euro zone banks cheap loans to ease the credit crunch.

   The ECB move put pressure on the euro while the dollar reversed higher as investors reduced bets against the U.S. currency. A strengthening dollar undermined oil’s advance.

   On Wall Street, all the three major U.S. stock indices were heading for the open little changed after popping up briefly following the ECB move.

   Fundamentally, weekly supply data from the American Petroleum Institute was bullish, showing Tuesday that U.S. crude stocks plunging 4.6 million bbl last week, compared to estimates for a draw of 2.8 million bbl.

Geopolitical risks to supply from the Middle East and Africa also boosted oil futures.

   Technically, minor trend has turned higher for crude and product futures .

   At the 9:00 AM ET opening bell, NYMEX January crude futures were up 56cts at $97.80 bbl after posting a one-week high at $98.50 earlier.

   January heating oil futures opened up 3.88cts at $2.8882 gal after posting a one-week high at $2.8890 while January RBOB futures opened up 1.18cts at $2.5905 gal after posting a one-week high of $2.5985.