West Texas Intermediate crude climbed from the lowest price in more than a week as a U.S. Senate committee approved military strikes on Syria, heightening the threat of a wider conflict in the Middle East.
Futures advanced as much as 0.8 percent in New York after falling by the most in two weeks yesterday. The Senate Foreign Relations Committee voted to authorize President Barack Obama to conduct a restricted operation following the alleged use of chemical weapons by President Bashar al-Assad, clearing the way for consideration by the full Senate. U.S. crude stockpiles shrank by 2 million barrels last week, according to a Bloomberg News survey of analysts before government data today.
“Crude is finding a little support from U.S. saber-rattling and across-the-board falls in U.S. inventories,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London. “While intervention in Syria may discourage the use of chemical weapons, by weakening Assad’s forces just as they were regaining a degree of superiority over the rebels, it may just serve to prolong the civil war.”
WTI for October delivery increased as much as 81 cents to $108.04 a barrel in electronic trading on the New York Mercantile Exchange, and was at $107.86 at 1:29 p.m. London time. The contract dropped 1.2 percent to $107.23 yesterday, the biggest decline since Aug. 20 and the lowest settlement since Aug. 26. The volume of all futures traded was about 50 percent below the 100-day average.
Brent for October settlement was 40 cents higher at $115.31 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.39 to WTI, compared with $7.68 yesterday.
Obama is seeking approval from Congress before taking action against Syria. U.S. lawmakers are scheduled to reconvene on Sept. 9 after a five-week break.
The resolution supports the use of force in a “limited and specified manner against legitimate military targets” during a 60-day period following enactment, with a possible 30-day extension at the president’s request. The full Senate next week will consider the resolution, which doesn’t authorize the use of U.S. ground troops in combat roles.
The vote was the first hurdle for Obama in his bid for congressional support for strikes againstal-Assad, who has threatened to retaliate. Two of Obama’s fellow Democrats on the panel voted against the measure after voicing concern that the U.S. risked being drawn into Syria’s civil war.
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.
Crude stockpiles in the U.S., the world’s biggest oil consumer, dropped by 4.16 million barrels in the week ended Aug. 30, the American Petroleum Institute reported yesterday. Gasoline inventories slid by 387,000 barrels, the industry group in Washington said.
Supplies probably declined by 700,000 barrels, according to the median forecast of 12 analysts surveyed before today’s Energy Information Administration report. Distillate fuels, including heating oil and diesel, decreased by 109,000 barrels, compared with a projected 600,000 barrel gain in the survey.
The API collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey.
Brent has technical resistance along its 30-day upper Bollinger Band, at about $116.45 a barrel today, data compiled by Bloomberg show. Futures halted intraday advances near this indicator the past three days. Sell orders tend to be clustered around chart-resistance levels.
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