By Victor Reklaitis and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — Syria was the central focus for oil markets on Wednesday, with futures rising to the highest level in more than two years and as one investment bank said Brent crude could surge as high as $150 a barrel amid the crisis.
U.S. crude oil for October delivery CLV3 +0.84% was last up $1.39, or 1.3%, to $110.40 a barrel in electronic trading after surging almost 3% Tuesday on the New York Mercantile Exchange. Earlier on Wednesday the contract topped $112 a barrel at one point.
The Nymex crude contract hasn’t settled above $110 a barrel since May 2011.
October Brent crude UK:LCOV3 +1.17% also extended gains, rising $1.63 cents, or 1.4%, to $115.99 a barrel, building on Tuesday’s 3.3% rally.
The gains continued a sharp upward trend that started with U.S. Secretary of State John Kerry saying on Monday that Washington believed the Syrian government had used chemical weapons against civilians.
With the U.S. weighing a possible strike against Syrian government, the Arab League on Tuesday called for an international response to the alleged gas attack on civilians, though they didn’t specifically endorse a unilateral U.S. action.
Meanwhile, a Syrian opposition coalition said in a statement Tuesday that the government had used phosphorus and napalm bombs against civilians in rural Aleppo a day earlier, Reuters reported, adding the claims couldn’t be verified. Check out MarketWatch’s live streaming updates on the Syrian conflict.
Under SocGen’s “upside scenario,” which includes “a significant supply disruption in Iraq or elsewhere,” Brent could hit $150.
However, Wittner added that any price spikes likely wouldn’t last, as Saudi Arabia could make up for the supply disruptions, and many oil-importing nations have strategic reserves they could use.
Rivkin global analyst Tim Radford agreed the gains were temporary but was more dismissive of the odds of a U.S. strike.
“It really is worst-case-scenario-type fear driving oil prices higher. And while the global press have been talking up a likely military strike by the West, it remains unlikely given the extremely sensitive nature of Syria’s political relationships,” Radford wrote in a note early Wednesday.
“Once certainty is restored by political leaders over the next few days, we should see speculative and fear-driven buying subside, leading to [Nymex] oil prices returning to levels prior to the U.S. Secretary of State John Kerry address on the Syrian chemical attacks, at around $107 a barrel,” Radford wrote.
Crude supplies climb in U.S.
The Syrian concerns trumped the bearish influence from a surprise gain for U.S. crude-oil supplies last week, as indicated American Petroleum Institute data out late Tuesday.
