By John M. Biers Crude oil futures Thursday extended their rally of recent days, jumping above the $90 a barrel point on increased tensions in the Middle East. Nymex front-month futures were trading at $91.48 a barrel, up $1.61. Brent futures were trading at $106.83 a barrel, up $1.67. Both commodities are trading at seven-week highs. The rally - which marks the seventh straight day in which oil prices have risen - follows an eventful day in the critical Middle East region. On Wednesday, Israel accused Iran of orchestrating a bombing attack at a resort in Bulgaria frequented by Israelis that killed at least six people and injured 30 others. Israeli Prime Minister Benjamin Netanyahu said Israel would "respond with force." Israel and Iran have long been regional rivals. The prospect of a clash between the two countries has at times propelled oil prices, not only because of the prospect of lower Iranian output, but also because of the potential for the conflict to escalate. Iran has repeatedly threatened to close the Strait of Hormuz, a critical waterway for oil shipments. Also Wednesday, Syrian rebels ruptured the inner circle of Syrian President Bashar al-Assad, killing three high-level officials with a bomb blast that has also fueled speculation that the much-criticized regime may be close to falling. Although Syria is not a major oil producer, the country's proximity to other major oil producers has perturbed the market. The current Syrian regime is also allied with Iran. "Clearly yesterday was a rough day out in the Middle East," said trader John Kilduff with Again Capital. Mr. Kilduff said the prospect of the fall of the Syrian regime has also troubled Iran, which would lose a major ally in the region if the Assad regime falls. "There's a real apprehension about what would their (Iran's) act of desperation be," he said. Analyst Dominick Chirichella said oil is "trying to establish a new trading range" in light of the rising tensions in the region. He said the incidents create "limited downside" for oil in the near-term. "The market is back to being driven by the possibility of a supply interruption in the Middle East region of the world," Mr. Chirichella said in a note. "Whether or not any of the events that have occurred over the last twenty four hours will eventually change the supply dynamics of the region is certainly an unknown." The resurgence of geopolitical risk overshadowed weak employment results released Thursday that pointed to a sharp increase in the number of U.S. workers filing applications for jobless benefits. Initial jobless claims grew by 34,000 to a seasonally adjusted 386,000 in the week ended July 14, the Labor Department said Thursday. It was the largest weekly gain since April 2011. Economists surveyed by Dow Jones Newswires had forecast 365,000 new applications for jobless benefits last week. -Write to John Biers at john.biers@dowjones.com (Eric Morath and Jeffrey Sparshott contributed to this report)

Source