RTTN: OIL FUTURES: Crude Higher Amid Mideast Tensions, Inventory Data
--Oil rallies following unconfirmed pipeline blast rumors
--Turkey-Syria tensions underpin prices
--U.S. inventories rise more than expected
By Dan Strumpf
NEW YORK--Oil futures were higher Thursday, but trading was volatile following rumors of a Middle East pipeline explosion and a report on U.S. oil inventories.
Light, sweet crude for November delivery rose $1.14, or 1.2%, to $92.39 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe climbed 81 cents, or 0.7%, to $115.14 a barrel.
Futures rallied midmorning after unconfirmed rumors of a pipeline explosion resulting from the escalating conflict between Turkey and Syria. The widening conflict between the neighboring countries has underpinned crude prices in recent days amid fears that Syria's civil war is spilling over into its neighbors.
"It just shows how nervous the market is," said Andy Lebow, senior vice president of energy futures at Jefferies Bache. "Whatever the pipeline story is, the market rallied on it."
Although neither country is a major oil producer, Turkey is home to several major oil pipelines that transport crude from Iraq and from Azerbaijan. The Turkish port of Ceyhan is the terminus for both the Baku-Tbilisi-Ceyhan Pipeline, which transports up to 1.2 million barrels a day of Azeri crude, and the Kirkuk-Ceyhan pipeline, which carries up to 1.65 million barrels a day of Iraqi crude, according to the U.S. Energy Information Administration.
However, the EIA also says that the Iraq section of the Kirkuk-Ceyhan pipeline has been subject to frequent attacks in the past, often disrupting operations. In July, the BBC reported that the pipeline was shut down for a time after a blast that was blamed on Kurdish separatists.
Tensions were already high overnight, after Turkish fighter jets grounded a Syrian passenger plane traveling from Moscow to Damascus on suspicions of carrying weapons.
Thursday's rally is the latest big price swing to overtake the oil market in recent sessions. Prices have been caught between worries about supply disruptions sending prices higher and weak demand pulling the market lower. On Wednesday, Nymex crude slumped 1.2% on demand concerns.
Nymex crude rallied as high as $92.94 a barrel on the rumors, while Brent touched $116. But the contracts pared some of their gains after the EIA reported a bigger-than-expected increase in U.S. oil stockpiles, amid weak demand and strong U.S. production.
U.S. oil inventories rose 1.7 million barrels to 366.4 million barrels, the highest level ever for the week since records began, according to the EIA. Analysts polled by Dow Jones Newswires expected an increase of just 600,000 barrels.
Gasoline stocks, meanwhile, fell 500,000 barrels. Stocks of distillates, including heating oil and diesel, fell 3.2 million barrels.
Gasoline stockpiles were expected to fall 400,000 barrels, while distillate inventories were seen falling 600,000 barrels, according to analysts.
Front-month November reformulated gasoline blendstock, or RBOB, recently fell 0.6 cent, or 0.2%, to $2.9533 a gallon. November heating oil rose 4.23 cents, or 1.3%, to $3.2554 a gallon.
