Oil prices continued the upside wave to end last week on bullish terms near $99, that was after renewed concerns in oil market overshadowed the gloomy US recession outlook that was trimming gains in the past period.
Cold weather in the in the US Northeast supported heating oil well that in role added upside momentum to April's contract, that among on going geopolitical tension in the Middle East and fears revolving the upcoming March OPEC meeting where expectations are the organization is to keep production levels intact or even pursue cutting is agitating the markets; especially that the Venezuelan US crisis dominated the scene Hugo Chavez comments referring to $100 per barrel price for oil as fair promising that the South American nation would do all it can within OPEC to support prices. On Friday crude contracts ended up 58 cents closing at $97.50 retreating from its day high that was set at $99.37 per barrel.
The ongoing political riot from the Middle East is still taking its toll on crude trade this week, which is threatening oil supplies from the two nations, Iraq and Iran which make up almost 20% of OPCE's output capacity. The Turkish military's incursion into Iraq hunting Kurdish PPK guerrillas is still a predominant concern, according to the Turkish military since the February 21, they killed 112 militants and no clear indications of rest in the region has been detected.
From another geopolitical angle, Iran's nuclear ambition is still the talk of nations and Iran warns that new sanctions to be imposed on them will have their cost. The United States, France, and Britain tabled a new resolution draft for the United Nation Security Council imposing new sanctions of the country which will be voted on in the course of this week prolonging the era of unease in the market.
All aspects combined overweigh fears of a potential US recession, inflation in the economy has abrupt the opposite effect on oil contracts as speculators hedge against rising pipeline pressures. The likelihood for oil this week is to continue its upside trend as seemingly it's still not near overbought areas with the current rising tension. As of 8 GMT oil trimmed its earlier session's gains slightly and now are up 52 cents after setting the highest at $99.70 per barrel while the lowest was near the opening levels at $98.90 as now it trades near $99.30s per barrel.