Brent crude climbs to near $111

Brent crude edged up to near $111 a barrel this morning as rising tensions over a suspected chemical weapons attack in Syria raised the prospect of more military action in the Middle East.

The United States and its allies have met in Jordan for what could be a council of war should they decide to punish Syrian President Bashar al-Assad, who has denied using chemical weapons and blamed rebels for staging such attacks.

Brent crude for October was at $110.98, up 25 cents by 06.46 GMT, after settling down 0.3 per cent in the previous session. Brent hit $111.68 yesterday, its highest since April 2nd.

US crude for October delivery rose 28 cents to $106.20 a barrel, after falling 0.5 per cent the previous day as data showed US durable goods orders had dropped the most in nearly a year.

“Any dips in oil prices will be well supported by tensions bubbling in Syria as that has the potential to spread into other parts of the region,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

Unrest in the Middle East, which pumps a third of the world’s oil, has supported Brent crude as investors fear that the crises in Syria and Egypt could spill over to the rest of the region and disrupt oil supply.

The United States put Syria’s Assad on notice yesterday that it believes he was responsible for using chemical weapons against civilians last week in what Secretary of State John Kerry called a “moral obscenity.”

In Libya, one of its ports, Marsa al-Brega, has resumed crude loadings after workers’ protests reduced exports from the OPEC producer to the lowest since its civil war in 2011.

Libya’s largest port Es Sider remained shut. The country yesterday warned that it will attack and destroy any tanker illegally exporting oil. Its armed forces last week fired at a Liberian-flagged tanker close to Es Sider port.

In the United States, weak data on home sales and durable goods orders tempered views that the Federal Reserve could start paring back stimulus as soon as September.

“We’ve probably been putting the cart before the horse,” mR Le Brun said. “If the tapering is pushed back later into 2013, that should be supportive of risk assets such as gold and oil.”

The American Petroleum Institute will release its weekly oil stocks data later today.

A preliminary Reuters poll showed that US commercial crude stockpiles were expected to have fallen last week as refinery utilisation rates were at high levels, and gasoline inventories likely dipped primarily due to seasonal factors.

Reuters