Oil soars to new high on ME unrest
New York, June 15, 2013
Oil rose and US crude hit a nine-month intraday high on Friday, after news that the United States had authorized sending US weapons to Syrian rebels sparked concerns about Middle East supplies.
President Barack Obama authorized arming rebels in Syria after the White House said it had proof the Syrian government had used chemical weapons against them.
Although Syria is not a key global oil supplier, investors are worried that an escalating civil war could lead to unrest in oil-producing regions of the Middle East, which pumps more than a third of the world's oil. Russian Foreign Minister Sergei Lavrov said more US military support for rebel Syrian forces could stoke violence in the Middle East.
"Elevated worries about Syria seems to have attracted some fresh length in the market," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
The news pushed crude out of a sluggish trading range, sending global benchmark Brent to a more than two-month high and US West Texas Intermediate (WTI) to a nine-month high, exiting the $90 to $97 a barrel range WTI had held since May 1.
As gains in US crude outpaced those of Brent, the premium the August contract for the international benchmark over August WTI narrowed to $7.86 a barrel, from $8.03 on Thursday.
Brent's premium to WTI, which was over $20 a barrel in February, has narrowed sharply as new pipeline and rail capacity has come online to move a glut of oil from Cushing, Oklahoma, the delivery point of the US oil futures contract, to the Gulf Coast refining center.
Front-month Brent futures settled 98 cents higher at $105.93 per barrel, the highest settlement price since April 9, after touching a high of $106.64.
Brent, which had been bouncing between $99 and $105 for the past eight sessions, settled up 1.3 percent on the week.
US oil settled $1.16 higher at $97.85 per barrel, the highest settlement since late January, after touching a nine-month high of $98.25. It was up 1.9 percent on the week.
US crude also garnered some strength from data earlier this week that showed stronger-than-expected retail sales and a fall in weekly jobless claims.
On Friday, the Thomson Reuters/University of Michigan's preliminary index showed consumer sentiment fell in June after touching a near six-year high last month. June's reading was the second highest in the last eight months, indicating consumer sentiment is still fairly strong.
Investor sentiment that the Federal Reserve will continue its bond-buying program also supported prices.
US gasoline futures hit their highest level in close to a month at $2.91 per gallon, but settled at $2.89. Brokers said funds got caught short trading gasoline and needed to buy back contracts to cover positions.
Heating oil futures rose to $2.98 per gallon, their highest level since April 4, before settling at $2.96.
The dollar sank to a four-month low on Thursday against a basket of currencies, lending support to oil prices.
Without concerns about Middle East oil supply, the market is faced with high stocks of crude and waning demand, analysts said.
Opec and the US Energy Information Administration cut their global oil demand growth forecasts on Tuesday. On Wednesday, the International Energy Agency said modest economic growth was limiting global oil demand, and some developed economies would see declines in oil consumption this year.
North Dakota, the second largest oil producing state in the US, reached another record output in April.-Reuters