BLBG:Brent Set for Fourth Weekly Gain as U.S. Pushes for Syria Strike
Brent crude headed for a fourth weekly gain, the longest rising streak since February, as U.S. President Barack Obama sought diplomatic backing at the G-20 summit in Russia for a military strike on Syria.
Futures were little changed in London and have climbed 1.2 percent this week. Obama began meetings in St. Petersburg as he tried to persuade other leaders of the Group of 20 nations to support armed intervention in response to Syria’s alleged use of chemical weapons. West Texas Intermediate may rise next week as plans for an attack gather pace amid improving economic data and reduced stockpiles, a Bloomberg survey showed.
“A military strike is not fully priced in,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, who estimates Brent may rally to $127 a barrel should an attack be launched. “It’s only a question of time until the U.S. is active as Obama is really committed to lead a military strike and can’t afford to lose face.”
Brent for October settlement rose 20 cents to $115.46 a barrel on the ICE Futures Europe exchange at 9:52 a.m. London time. The volume of all futures traded was about 16 percent below the 100-day average. The European benchmark crude was at a premium of $6.75 to WTI, compared with $6.89 yesterday.
WTI for October delivery was at $108.67 a barrel in electronic trading on the New York Mercantile Exchange, up 30 cents. The contract yesterday climbed 1.1 percent to $108.37, the biggest gain since Aug. 27. Prices are up 1 percent this week for a second weekly advance.
Syrian Unrest
The G-20 is hosted by Russian President Vladimir Putin, an ally of Syrian President Bashar al-Assad, who has cast doubts on U.S. evidence that Assad’s regime used chemical weapons on residents in a suburb of Damascus in August. Crude surged to the highest in more than two years last week on concern an escalation of the conflict in Syria may disrupt the region’s oil supplies.
The Middle East accounted for about 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency. Syria borders Iraq, the largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Obama will seek approval from Congress before taking action against Syria after the Senate Foreign Relations Committee voted for a restricted operation. U.S. lawmakers are scheduled to reconvene on Sept. 9 after a five-week break.
WTI Spike
“Syria is the focus and the way that the incursion occurs will dictate how oil will behave,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney who predicts investors may sell WTI contracts at about $112.50 a barrel. “There will be a spike. The event to push it through $112.50 is going to have to be pretty huge.”
Sixteen of 36 analysts and traders, or 44 percent, forecast that WTI crude will climb through Sept. 13 as the threat of military action grows and the U.S. economy improves. Fifteen respondents predicted a slide and five said there will be no change. Last week, 43 percent in the survey estimated futures will increase.
U.S. employers probably picked up the pace of hiring in August, signaling a strengthening labor market that will help sustain growth, economists said before a report today due to be released at 1:30 p.m. London time.
Payrolls rose by 180,000 following a 162,000 gain the prior month, according to the median forecast of 94 economists in a Bloomberg survey. Unemployment stayed at 7.4 percent, matching the lowest since December 2008, they projected.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
