GO
Loading...

UPDATE 2-Brent rises towards $113 on Syria-Turkey tensions

* Escalating Turkey-Syria conflict threatens supplies

* IMF cuts global growth forecast, sees soft landing in China

* Coming up: ECB chief Mario Draghi speaks at 0730 GMT (Updates prices) By Ramya Venugopal

SINGAPORE, Oct 9 (Reuters) - Brent crude futures rose towards $113 a barrel on Tuesday after two days of losses, with supply fears due to escalating tensions in the Middle East prevailing over a sluggish outlook for global demand.

Turkish President Abdullah Gul said on Monday that the worst case scenarios between his country and Syria are now playing out, fuelling concerns that the 18-month old conflict in Syria may spread to other countries in the region.

"Right now the market is concerned about the continuing conflict between Syria and Turkey, and the worry is that if it escalates, it may disrupt supplies," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.

Front-month Brent futures had risen 89 cents to $112.71 per barrel by 0618 GMT. U.S. crude gained 85 cents to $90.18, also rebounding after two consecutive sessions of declines.

Brent's premium to U.S. crude jumped to $22.5 per barrel, the most since Oct. 20 last year.

Tensions between Syria and Turkey are at their worst since March after cross-border firing accidentally killed some Turkish civilians last week, causing Istanbul to boost its military presence along the Syrian border

This could threaten oil production in the north of Iraq and its transport to the West, analysts said.

Turkey's armed forces have been responding in kind to gunfire and shelling is spilling across from the south, where Syrian President Bashar al-Assad's forces have been battling rebels who control swathes of territory.

Concerns over the situation have eclipsed Iran's long-running row with the West over Tehran's disputed nuclear programme that has led to sanctions on Iranian oil shipments.

But a poor outlook for the global economy is keeping a lid on oil price gains.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 24-Hour Brent chart: 24-hour U.S. crude chart: IMF revises growth forecasts: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> IMF CUTS FORECAST

The International Monetary Fund cut its global growth forecast for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.

For 2012, the IMF now expects global output to grow just 3.3 percent, down from its July estimate of 3.5 percent, making it the slowest year of growth since 2009.

It predicted only a modest pickup next year to 3.6 percent, below its July estimate of 3.9 percent.

Growth in China's economy, the world's second-biggest, will slow to 7.8 percent this year from 9.2 percent in 2011, the IMF said, warning of risks to emerging Asia if the euro zone crisis worsens and the United States does not avoid its "fiscal cliff".

Looking ahead, investors are awaiting the outcome of the European Union's Economic and Financial Affairs council in Luxembourg later in the day for any cues on Greece's troubles and the likelihood of a Spanish request for a bailout.

"The headlines will drive the market over the next 24 hours and help determine if the recent risk-on sentiment continues," said Ben Taylor, a sales trader at CMC Markets.

(Editing by Manolo Serapio Jr. and Joseph Radford)

((ramya.venugopal@thomsonreuters.com)(+65 6870 3826)(Reuters Messaging: ramya.venugopal.thomsonreuters.com@reuters.net))

Keywords: MARKETS OIL/