U.S. oil futures at two-year high amid ongoing concern over Syria
BY BRETT PHILBIN
NEW YORK -- U.S. oil futures rose to a roughly two-year high Wednesday as fears over a potential military strike in Syria kept traders focused on potential supply disruptions in the crude-rich Middle Eastern region.
Light, sweet crude for October delivery settled $1.09 higher, or 1%, at $110.10 a barrel on the New York Mercantile Exchange. The settlement was Nymex crude's highest since May 3, 2011.
U.S. oil prices has risen roughly 4% over the past two trading sessions as world leaders have condemned the alleged use of chemical weapons on rebels by Syria's government and voiced support for airstrikes.
If U.S. crude continues its recent rally and climbs above $114 a barrel, it will trade in a range it last reached in the summer and early fall of 2008. That year, prices eventually skyrocketed to near $150 a barrel and helped contribute to a global recession.
Meanwhile on Wednesday, Brent crude on the ICE futures exchange climbed $2.33, or 2%, to $116.61 a barrel and reached its highest settlement value since Feb. 19.
"The market's concerns are with supply disruption," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Conn.
Although Syria isn't a big oil exporter, an escalation in its civil war raises fears of a wider conflict in the Middle East, where about one-third of the world's oil is produced. Concerns center on potential disruptions to the flow of oil through the Suez Canal in Egypt, or pipelines throughout the region.
Those fears led market participants to shrug off a surprise three-million-barrel jump in U.S. crude inventories last week, bucking analysts' expectations for a 300,000-barrel decline. The data, released by the U.S. Energy Information Administration, reflected the largest oil stockpile increase in three months.
In a research note, BNP Paribas analysts said if it were a "normal week," the unexpected crude stock increase would have sent oil prices lower.
Front-month September formulated gasoline blendstock settled 6.04 cents higher, or 2%, at $3.0945 a gallon. September heating oil settled 4.74 cents higher, or 1.5%, at $3.2083 a gallon.
Dow Jones Newswires