Oil rallies on US storm fears, heightened Syria risk
October 1, 2015, 4:49 pm

Oil prices jumped as much as 4 percent on Thursday, boosted by a rally in U.S. gasoline on worries about potential damage to oil installations from a hurricane headed for the U.S. East Coast, traders said.

Heightened geopolitical risk from the worsening war in Syria also boosted crude futures in earlier trade.

U.S. West Texas Intermediate (WTI) futures were at $46.72 a barrel at 10:27 a.m. EDT (1427 GMT), up $1.63 from their last settlement, or 3.6 percent.
Brent crude futures were at $49.55 per barrel, up $1.18 or 2.4 percent.

Weather forecasters said Hurricane Joaquin could hit the New York metropolitan area as a tropical storm on Tuesday, potentially following the destructive course of Hurricane Sandy in 2012.

Traders watch Atlantic hurricanes because they can lead to precautionary shutdowns of Gulf of Mexico oil and gas platforms, and in exceptional cases damage energy infrastructure.

Russia launched air strikes in Syria on Wednesday in its biggest Middle East intervention in decades. The attacks raised the specter of Washington and Moscow running air strikes in the same region, but without coordination."Russia`s military intervention in the Syrian conflict has increased the geopolitical risks, which is giving tailwind to the prices," Carsten Fritsch, analyst at Commerzbank, said.

Signs of economic slowdown in Asia and brimming U.S. oil stocks earlier limited the rally. Surveys on Thursday showed activity in China`s factories shrank and manufacturers` confidence worsened in Japan.

"Given the international tension, the oil market did remarkably well not to rally several dollars yesterday," oil broker PVM said in a report. "Perhaps it was the U.S. oil inventory data which capped gains."

In a reminder that a supply glut persists, U.S. crude inventories rose by 4 million barrels to 457.9 million in the week to Sept. 25, more than expected, a government report said on Wednesday.

Brent has almost halved in the past year because of excess supply and a 2014 shift in strategy by the Organization of the Petroleum Exporting Countries to defend market share against higher-cost supplies, rather than cut output to prop up prices.

There are signs that OPEC`s strategy to curb growth in higher-cost production such as U.S. shale by allowing prices to fall is starting to deliver, analysts say.
U.S. crude output rose by 94,000 barrels a day in July to 9.358 million bpd, U.S. data showed on Wednesday. Production was 9.612 million bpd in April and declined in May and June.


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Jan23      07:55
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