Crude oil at 28-month high amid heightened tension over Syria


Crude oil at 28-month high amid heightened tension over Syria


NEW YORK -- Crude-oil prices climbed 2% Friday to a 28-month high amid heightened anxieties over the U.S. and Russian impasse over Syria.

At the conclusion of the summit of the Group of 20 industrial and developing nations, U.S. President Barack Obama said he would make his case in a televised address Tuesday on why he supports strikes against Syria in response to allegations the government there recently used chemical weapons against its people.

Russian President Vladimir Putin, in a separate news conference, blamed Syrian rebels for the chemical attacks and highlighted the rift between the two leaders. "I don't agree with (Mr. Obama's) arguments, and he doesn't agree with mine," Mr. Putin said. He pledged to continue supplying weapons and humanitarian aid to Syria.

"Putin's comments really ratcheted things up," said Andy Lebow, senior vice president of energy futures at Jefferies Bache LLC in New York.

"The market's really nervous," Mr. Lebow said, referring to concerns that prices could spike if the Syrian situation spreads further into the Middle East oil patch.

Light, sweet crude oil for October delivery on the New York Mercantile Exchange ended $2.16 higher at $110.53 a barrel. That was the highest settlement price since May 3, 2011, when prices settled at $111.05 a barrel just days after U.S. forces killed al Qaeda leader Osama bin Laden.

ICE Brent crude oil for October delivery settled 0.8%, or 86 cents, higher at $116.12 a barrel. The contract gained 1.9% for the week.

The crisis in Syria has inflated oil prices as traders worried that any military action could spill over to other oil-rich nations such as Iraq, Iran or Saudi Arabia, in the region where roughly one-third of the world's oil is produced. Syria isn't a major oil producer, but it is near major sea routes and key pipelines in the Persian Gulf and Turkey, which transport millions of barrels of crude and refined products daily.

"As long as a U.S. Syrian attack remains in an anticipatory phase, the crude benchmarks will remain highly sensitized to even modest tidbits of bullish news," said Jim Ritterbusch, president of Ritterbusch and Associates, a Galena, Ill.-based oil consultancy. He projected U.S. futures prices would return to $112 a barrel early next week. Prices hit an intraday high of $112.24 a barrel on Aug. 28, when the market expected an imminent strike on Syria.

Crude prices also are finding support from strong refiner demand in the U.S., Mr. Ritterbusch said. Government data show refiners lifted oil processing to a seven-year high for the last week in August, which reduced the amount of crude sitting in storage. Stocks at Cushing, Okla., the pricing benchmark for the Nymex contract, have fallen 30% over the past nine weeks, dropping to the lowest level since February 2012.

Front-month reformulated gasoline blendstock futures rose for the first time in six days. October RBOB settled up 1.77 cents at $2.8537 a gallon. October heating oil, a proxy for diesel fuel, settled 2.4 cents higher, at $3.1637 a gallon.

Dow Jones Newswires

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