US Crude Hits Nine Month High
Brent crude rose and U.S. oil struck a nine-month high on Friday after news that the United States had authorized sending U.S. weapons to Syrian rebels sparked concerns about Middle East supplies.
Though Syria is not a key global oil supplier, investors are worried that an escalating civil war could lead to unrest in oil-producing regions of the Middle East.
The news pushed crude out of a sluggish trading range, sending global benchmark Brent to a more than two-month high and U.S. West Texas Intermediate to a nine-month high, exiting the $90 to $97 a barrel range WTI had held since May 1.
"The bulls are in charge either until we get news that the economy is in trouble or the Fed pulls back on stimulus," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
Front-month Brent futures were on track for their strongest week since April, having hit a high of nearly $107 per barrel. Brent was last trading up near $106. Brent crude had been bouncing between $99 and $105 for the past eight sessions.
U.S. oil was up near $98 a barrel, after rising to a high of $98.25.
"Crude oil has been trading in a range for more than a month," Petromatrix analyst Olivier Jakob said.
"With the escalation in Syria, the buying on the dips is probably going to be stronger as the geopolitical premium needs to be increased."
President Barack Obama has authorized the shipment of U.S. weapons to Syrian rebels for the first time after the White House said it had proof that the Syrian government used chemical weapons against rebels.
U.S. crude also garnered some strength from data earlier this week that showed stronger-than-expected retail sales and a fall in weekly jobless claims. Investor sentiment that the Federal Reserve will continue its bond-buying program also supported prices.
U.S. gasoline futures were at their highest level in close to a month at $2.91 per gallon, following a rise on Thursday. Brokers said funds got caught short trading gasoline and needed to buy back contracts to cover positions.
Heating oil futures were trading at their highest since April 4 at $2.98.
OPEC and the U.S. Energy Information Administration cut their global oil demand growth forecasts on Tuesday. On Wednesday, the International Energy Agency said modest economic growth was limiting global oil demand, and some developed economies would see declines in oil consumption this year.
The dollar remained close to a four-month low hit on Thursday against a basket of currencies, lending support to oil prices.
Gains in oil prices accelerated during the session after U.S. data showed producer prices rose more than expected in May but inflationary pressures were still muted, bolstering hopes the monetary stimulus would continue, supporting oil demand. Higher gasoline prices led the gains in prices.
Oil futures have risen in spite of forecasts of "sluggish" demand growth by industry bodies such as the International Energy Agency.
"Weaker dollar, stronger stocks, more bullish front-end (of the curve)" said an oil trader, listing reasons oil prices were higher on Friday.
In other geopolitical news, millions of Iranians voted to choose between six candidates to replace incumbent president Mahmoud Ahmadinejad, but none is seen as challenging the Islamic Republic's 34-year-old system of clerical rule.
Analysts say the outcome is unlikely to have any short-term impact on oil because any improvement in relations with the West over Iran's nuclear programme will take time to translate into a change in policy.