Syria-US tensions push price of oil to a near five-month high
Asian stocks rise in subdued trading
The price of oil is on the advance, due to geopolitical risks in the Middle East and positive equity markets. Photograph: Karim Mohsen/Getty Images
Brent crude extended gains above $111 a barrel over-night to a near five-month high as rising tensions over a suspected chemical weapons attack in Syria added to concerns of increased unrest in the Middle East that could disrupt supply. Oil prices also gained alongside equities after a steep drop in US new home sales on Friday tempered expectations the Federal Reserve will soon reduce stimulus.
“The oil market is heading to an upside due to geopolitical risks in the Middle East and positive equity markets,” said Tetsu Emori, a commodities fund manager at Astmax Investment in Tokyo.
Brent crude for October touched $111.68, the highest since April 2nd and was at $111.29 a barrel, up 25 cents. US crude for October delivery rose 60 cents to $107.02 after a 1 per cent drop last week.
Brent has risen in the past two weeks on tighter supply due to disrupted output, spanning from the North Sea to Libya, while positive economic data from the euro zone and China last week improved the outlook for fuel demand.
“Europe is recovering and China has probably hit bottom already. That should support prices,” Emori said, adding that he expects US crude and Brent to rise to at least $115 and $120 a barrel, respectively, by the end of this year.
Asian stocks rose and gold hit a near three-month high on Monday, extending a move started late last week. Trading was subdued, particularly in the currency markets, as investors awaited fresh offshore leads amid a lack of market-moving economic news out of Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.7 per cent, adding to Friday’s 0.8 per cent gain.
Tokyo’s Nikkei was little changed. Hong Kong’s Hang Seng index advanced 1.0 per cent, Australia’s S&P/ASX 200 index edged up 0.2 per cent and South Korea’s KOSPI put on 0.9 percent. Monday’s gains came as a welcome relief after the MSCI index suffered a hefty 2.9 percent drop last week.
Much of the heat was felt in the region’s emerging markets as investors pulled out of crowded trades in preparation for a post-stimulus world. Last week Indonesian stocks posted an 8.7 per cent slide in their biggest fall since September 2011. They were up 0.5 per cent on Monday. India, Indonesia and Brazil have scrambled to try to stem the destabilising outflows that have slammed their currencies sharply lower, with the rupee skidding to record lows recently.