BLBG:WTI Crude Advances a Third Day as Syria Says Attacked by Israel
West Texas Intermediate crude headed for the biggest three-day gain in nine months as air strikes in Syria renewed concern that unrest will spread in the Middle East and disrupt supply. London’s Brent oil rose.
WTI futures climbed as much as 1.6 percent in New York after Syria’s state news agency said Israeli aircraft attacked a military research center on the outskirts of Damascus yesterday. The offensive was a “declaration of war,” Syria’s deputy foreign minister told CNN. Israel didn’t confirm involvement. The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. WTI capped a second weekly gain May 3 after U.S. employment rose more than forecast.
“If the geopolitical events between Israel and Syria start to escalate, the market will automatically write in a premium and you should see a spike in the price of oil,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “The key on the topside is $98.50 and a break of that area may send the price to $100. Another couple of bombings and you will see it.”
WTI for June delivery gained as much as $1.56 to $97.17 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.23 at 3:12 p.m. Singapore time. The volume for all contracts traded was more than four times the 100-day average. Futures increased $1.62 to $95.61 on May 3, the highest close since April 2. Prices have risen 5.1 percent over the past three days, the most since August, and climbed 2.8 percent last week.
‘Dangerous Situation’
Brent for June settlement increased 38 cents, or 0.4 percent, to $104.57 a barrel on the London-based ICE Futures Europe exchange. The front-month European benchmark was at a premium of $8.34 to WTI futures. It ended the session at $8.58 on May 3, the narrowest differential based on closing prices since December 2011.
“The Israeli attack in Syria may be interpreted as a more dangerous situation in the Middle East and some more political risk premium pushing up the price,” Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said yesterday. “Oil markets react whenever there is trouble in the Middle East.”
The attack opens doors to all possibilities and Syria will use “any means” to protect its people, the country’s information minister, Omran al-Zoubi, said in a statement on state TV. The nation deployed rocket batteries directed toward Israel, the pro-government Damas Post website said, and the Israeli army said two Iron Dome missile defense systems were deployed in the north.
‘Likely Bottomed’
“Brent prices have likely bottomed,” Adam Longson, a New York-based analyst at Morgan Stanley, said in a note published today. “The global oil balance looks much tighter this summer with prices likely to trade back up to $110 to $115 a barrel” in the second half of this year, he said.
Net-long positions in WTI held by money managers, including hedge funds, commodity pools and commodity-trading advisers, rose by 11,554 futures and options combined to 193,962 in the seven days ended April 30, according to the Commodity Futures Trading Commission’s Commitments of Traders report.
The average price for regular gasoline at U.S. pumps advanced by 0.84 cent a gallon in the past two weeks to $3.5447 a gallon, according to Lundberg Survey Inc. It’s the first price increase in eight weeks.
Technical Resistance
Saudi Arabian Oil Co., the largest crude exporter, raised the June premium used to set official selling prices for its Arab Light blend for buyers in Asia and trimmed discounts on all grades to the Mediterranean and Europe.
The state-owned producer known as Saudi Aramco increased the monthly premium for the Light blend by 20 cents to $2 a barrel more than the average of Oman and Dubai grades, the company said yesterday in an e-mailed statement. Aramco cut the discount for Arab Heavy to Asia in half, narrowing it to 70 cents less than the Gulf benchmarks.
WTI’s rally may stall as futures approach a technical resistance level along a downward-sloping trend line going back to September, according to data compiled by Bloomberg. This line, around $96.75 a barrel today, connects to the high of January and is where prices halted advances in February and March. Sell orders tend to be clustered near chart-resistance levels.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
