LM:Brent oil fluctuates as lawmakers urge military action on Syria
Melbourne: Brent swung between gains and losses after two US lawmakers sought backing for an attack on Syria, fanning concern that possible military strikes may intensify the conflict there and disrupt Middle Eastern oil exports.
Futures were little changed in London after advancing on Monday for the first time in three days. Republican Senators John McCain of Arizona and South Carolina’s Lindsey Graham urged fellow lawmakers to recognize the risk of letting Syrian President Bashar al-Assad’s alleged use of chemical weapons go unanswered. Hedge funds and other money managers increased bullish bets on Brent to the highest in more than two years, data showed on Monday.
I don’t expect anything to happen for the next couple of days in regards to military action, said Michael Poulsen, an analyst at Global Risk Management in Middlefart, Denmark. But given the rhetoric used, something will happen in the not-so- distant future.
Brent for October settlement was at $114.66 a barrel on the ICE Futures Europe exchange, up 33 cents, at 9:28 am London time. The contract gained 32 cents to $114.33 on Monday. The European benchmark crude was at a premium of $7.51 to New York- traded West Texas Intermediate futures.
WTI for October delivery fell 54 cents from the 30 August settlement to $107.11 a barrel in electronic trading on the New York Mercantile Exchange. Floor trading was closed on Monday for the US labour day holiday, and Monday’s transactions will be booked today for settlement purposes.
Syria policy
Oil trimmed a third month of gains last week after the UK House of Commons rejected a proposed strike against Syria, prompting President Barack Obama to seek approval from Congress before taking action.
McCain and Graham, two of the Senate’s most vocal critics of Obama’s stance on Syria, said after a White House meeting on Monday they were persuaded that the president is working toward an effective policy.
The Middle East accounted for about 35% of global oil output in the first quarter of this year, according to data from the International Energy Agency. Syria, which produces limited amounts of oil, borders Iraq, the biggest producer after Saudi Arabia in the Organization of Petroleum Exporting Countries.
Libyan output
Libya is exporting a nominal quantity of crude from the Brega and Mellitah terminals, Omar Shakmak, the deputy oil minister, said without specifying the amounts shipped amid strikes and disruptions. The OPEC nation produced 575,000 barrels a day last month, according to a Bloomberg survey of analysts and producers.
Speculative bets that Brent will rise, in futures and options combined, outnumbered short positions by 231,962 lots in the week to 27 August, ICE Futures Europe said yesterday in a weekly report. That’s up 11% from last week and is the most since at least January 2011, the starting point for the data series.
Brent may extend gains in London after a bullish technical formation known as a golden cross. The 50-day moving average, at about $108.70 a barrel on Tuesday, on Monday climbed above the 200-day indicator for the first time since mid-April, data compiled by Bloomberg show. Investors typically buy contracts when a moving average rises over a longer-term one.
Volatility is only going to rise further as the price path seeks out the next headline, Stephen Schork, the president of Schork Group Inc., a consultant in Villanova, Pennsylvania, said in an e-mailed note on Tuesday. Wall Street is buying, with the rise in open interest implying that new money is starting to come back into ICE Brent. BLOOMBERG
