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Crude oil rises on Middle East fears, U.S. supply data eyed

Published 10/11/2012, 04:41 AM
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Investing.com - Crude oil futures were higher during European morning hours on Thursday, as investors continued to monitor rising geopolitical tensions in the Middle East, amid fears over a disruption to supplies from the region.

Oil traders were also focusing on closely-watched weekly supply data on U.S. stockpiles of crude and refined products from the U.S. Energy Information Administration later in the day.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD91.83 a barrel during European morning trade, climbing 0.6%.

Earlier in the day, prices rose by as much as 0.75% to hit a session high of USD91.97 a barrel.

Oil traders continued to focus on escalating tensions between Syria and Turkey and the possibility that Iran could support Syria in such a dispute.

Tensions between Turkey and Syria have been growing since Syrian shells last week killed five people in a Turkish border village. Turkey’s top general, Necdet Ozel, warned Wednesday of a tougher response if Syrian shells continue to land on Turkish soil.

Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.

Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 52% of proved reserves in 2011.

Market players now looked ahead to weekly data from the U.S. government on oil supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.

The data is released a day later than usual due to the Columbus Day Holiday in the U.S. on October 8.

The report was expected to show that U.S. crude oil stockpiles increased by 0.8 million barrels last week, while gasoline inventories were forecast to rise by a modest 0.25 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 1.65 million barrels last week, while gasoline stocks increased 2.47 million barrels.

The U.S. is the world’s biggest oil consuming country, responsible for almost 22% of global oil demand.

Oil’s gains were limited after Standard & Poor’s cut Spain’s credit rating by two notches to BBB-minus late Wednesday, and maintained a negative outlook on the debt-troubled country, citing mounting economic and political risks.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery rose 0.7% to trade at USD115.11 a barrel, with the spread between the Brent and crude contracts standing at USD23.28 a barrel, the widest since October 2011.

London-traded Brent prices have been well-supported in recent sessions, as a combination of lingering concerns over a disruption to supplies from the Middle East and worries over declining production in the North Sea-region have been boosting prices.

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