Oil tops $110 to end at more than 2-year high
2013-08-29 12:39:19
Tensions over Syria continued to feed supply concerns in the Middle East on Wednesday, lifting futures prices for oil to a close above $110 a barrel even after the latest U.S. data showed an unexpected climb in the past week’s crude supplies, according to MarketWatch.
Prices for West Texas Intermediate crude traded in New York logged their highest close in more than two years and one investment bank said Brent crude in London could surge to as high as $150 a barrel amid the crisis.
Oil markets are not trading based on the U.S. inventory data, and they probably won’t until the Syria situation plays out, said Tariq Zahir, managing member at Tyche Capital Advisors.
On the New York Mercantile Exchange, crude oil for October delivery /quotes/zigman/2291787 CLV3 -1.21% added $1.09, or 1%, to settle at $110.10 a barrel, after surging almost 3% Tuesday. In electronic trading overnight, the contract topped $112 a barrel.
The possibility of U.S. intervention in the Syrian civil war lifts Nymex oil futures above $110.
The settlement was the highest for a most-active Nymex crude contract since early May 2011, according to FactSet data.
Oil traded at around $109.90 shortly before U.S. government data on petroleum supplies were released Wednesday. After the data came out, prices pared gains then quickly recovered.
October Brent crude /quotes/zigman/2735838 UK:LCOV3 -1.34% added $2.25, or 2%, to close at $116.61 a barrel on ICE Futures, building on Tuesday’s 3.3% rally.
The gains continued a sharp upward trend that started with U.S. Secretary of State John Kerry saying on Monday that Washington believed the Syrian government had used chemical weapons against civilians. Read why oil could rise even without Syria tensions.
Oil has already been climbing a wall of worry based on Syria tensions and it could become a case of buy the rumor, sell the fact, said Phil Flynn, senior market analyst at Price Futures Group, “When the missiles fly, more than likely prices will drop,” he said.
Besides, the spike in prices will eventually hurt demand and increase the odds of a release from the U.S. Strategic Petroleum Reserve, he said.
With the U.S. weighing a possible strike against Syrian government, the Arab League on Tuesday called for an international response to the alleged gas attack on civilians, though they didn’t specifically endorse a unilateral U.S. action. Check out MarketWatch’s live streaming updates on the Syrian conflict.
“While Syria is not a major concern with oil supplies the biggest concern is a spillover to a wider conflict in the region,” said Zahir. “If Israel gets involved or [the turmoil] spreads to other nations in the region then we could be talking about a supply disruption.”
“Markets should be well supported on these fears,” he said, though oil could give back the gains it saw this week if the Syrian conflict is only minimal or doesn’t spread in the region. Read about why Syria worries oil traders.