NYMEX February crude futures settled $4.13 higher at $102.96/barrel Tuesday on a boost from bullish economic data and ongoing concerns of supply disruptions in the Middle East as US-Iran tensions rise.
February heating oil settled 12.40 cents higher at $3.0382/gal and February RBOB settled up 9.12 cents at $2.7486/gal.
ICE February Brent settled $4.75 higher at $112.13/b, while the Brent/WTI spread moved to $9.17/b from a previous settle of $8.55/b.
Carl Larry, president of Oil Outlooks, said interest picked up in the oil sector due to issues with Iran, as tensions escalate between it and the US. On Tuesday, Iran's army commander, Major General Ataollah Sale hi, warned the US not to return an aircraft carrier to the Persian Gulf following 10 days of Iranian war games in the strategic Strait of Hormuz, the official IR NA news agency reported.
The Iranian Navy said a US aircraft carrier entered a zone where Iran's ships and aircraft were engaged in war games that ended midnight (local time) on Monday. The exercises were designed as a show of Iranian military might. Also, better-than-expected manufacturing data continued to pump up optimism over the global economy.
The US Institute for Supply Management's index of manufacturing activity rose in December to 53.9 from 52.7 in November, above market expectations of a reading of 53.2.
US construction spending rose 1.2% in November -- its highest level since June 2010, according to the Commerce Department.
Michael Guido, director of hedge fund sales at Acquire, said a "bullish mix" of data to begin the year came amid stronger China and India manufacturing data as well as news of new/tighter sanctions against Iran.
Overnight, India's PM jumped to its highest level in six months for December, according to HS BC Holdings and Mar kit Economics, while China's PM rose to 50.3 for December from 49 in November, according to official government statistics. The forecast was for 49.0.
Guido noted that new Iranian sanctions imposed by the US over the weekend were "tough and tight," and will increase the response from Iran just as France also pushed for tougher sanctions on Iran's Central Bank and an embargo of Iran's oil exports.
"This leaves the Iranians with no choice but to respond. Add to this the positive manufacturing data from China and India and we get a quick 2% rally on both barrels," he said.
Over the weekend, President Ba rack Obama signed into law a bill that imposes sanctions on Iran's central bank, which penalizes foreign financial institutions that do business with Iran's central bank, Bank Marks.
