Oil settles above $109 at 18-month high: Marketwatch
YEREVAN, August 28. /ARKA/. Oil futures settled above $109 a barrel on Tuesday, buoyed by growing concerns over the potential for intervention by the U.S. and its allies in Syria and the possibility that the turmoil will spread to other parts of the oil-rich region.
Crude oil for October delivery CLV3 +1.92% rose $3.09, or 2.9%, to settle at $109.01 a barrel on the New York Mercantile Exchange. Prices, which saw a 50-cent drop a day earlier, marked the highest close for a most-active contract since Feb. 24, 2012, according to FactSet data.
Likewise, October Brent crude UK:LCOV3 +1.40% rose $3.63, or 3.3%, to $114.36 a barrel on ICE Futures. It hasn’t closed at a level that high since late February.
Traders worry that “the [Middle East] region could completely implode — a concern magnified by the comments of Iran & Russia,” said Matthew Parry, senior oil analyst at the International Energy Agency in Paris.
But “I think prices were already carrying a fairly large risk premium, and the latest rise only reflects an increase in concerns, not fresh worries per se,” he said.
U.S. Secretary of State John Kerry said Monday that Washington was certain the Syrian government had used chemical weapons against civilians and added that “there must be accountability” for its actions. Read how Syria "warning shot" could keep upward pressure on oil prices.
Syria’s government has denied the use of chemical weapons. Russia, China and Iran have warned against military intervention in Syria. According to BBC News, Russia said that such action would have “catastrophic consequences” for the region.
While Syria itself is a minor oil producer, one of the main worries is that an escalation of the conflict could hamper supply more broadly across the Middle East.
Oil futures rose in electronic trade Tuesday, canceling out their losses from the previous day, with the markets keeping one eye on the Syrian conflict and another on upcoming supply data.
Crude oil for October delivery CLV3 +0.17% recouped 49 cents, or 0.5%, to trade at $106.40 a barrel, erasing almost all of its 50-cent drop in Monday’s regular New York Mercantile Exchange session.
Likewise, October Brent crude UK:LCOV3 +0.22% recovered 42 cents, or 0.4%, to $111.15 a barrel after falling 31 cents on Monday.
The recovery came as U.S. Secretary of State John Kerry said Washington was certain that the Syrian government used chemical weapons against civilians and that “there must be accountability” for its actions.
Reports early Tuesday said the U.S. was consulting with allies as it decided what sort of action to take against the Syrian regime.
Syria itself is a minor oil producer, IG Markets chief market strategist Chris Weston noted in a post Tuesday on Twitter. The nation’s oil output had fallen to 39,000 barrels a day in the first half of 2013, down from 350,000 barrels a day in March 2011, he wrote.
However, some analysts cited the possibility that an escalation of the conflict could hamper supply more broadly across the key Middle East region. –0--