Oil advanced for the first time in three days as increasing tension in the Middle East countered concern that a global economic slowdown will curb demand.
Futures rose 3.4 percent as radar-assisted Turkish guns fired on Syrian artillery units and tanks for six consecutive days after the deaths of five people struck by a Syrian shell in Turkey on Oct. 3. The International Monetary Fund cut its global growth forecasts today as the euro area’s debt crisis escalates.
“There’s a struggle between the geopolitics versus the fundamentals in the market,” said John Kilduff, a partner at Again Capital LLC, a New York-based energy hedge fund. “There’s some anxiety about the Middle East that’s raising geopolitical concerns. This is trumping today’s warning from the IMF.”
Crude oil for November delivery increased $3.06 to $92.39 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 1. Prices are down 6.5 percent this year.
Brent oil for November settlement gained $2.68, or 2.4 percent, to end the session at $114.50 a barrel on the London-based ICE Futures Europe exchange.
Brent touched a $23.10-a-barrel premium to West Texas Intermediate oil traded in New York, the highest intraday level since Oct. 21, 2011, according to Bloomberg calculations of exchange data. It slipped to $22.11 at the settlement.
The price of Brent has risen as 14 North Sea Forties crude cargoes for October were delayed. Forties, the cheapest of the four grades that make up the Dated Brent benchmark, typically sets the marker used to price more than half of the world’s oil.
The 14 out of 16 Forties cargoes planned for export in this month have been delayed by three to 15 days, according to the latest loading program obtained by Bloomberg.
“We expected North Sea loadings would be rising this month,” Kilduff said. “They have now been pushed back, which is inflating the price of Brent.”
Turkish artillery units responded yesterday to fire from Syrian President Bashar al-Assad’s armed forces. Tensions between the two countries have risen with the 19-month rebellion against Assad’s government, as Turkey has offered support for the rebels.
“The increasing tension on the Turkish-Syrian border is providing additional geopolitical risk,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Saudi Arabia will help to satisfy all demand for crude, Ali al-Naimi, the kingdom’s oil minister, told reporters in Riyadh today before a meeting with his counterparts from member states of the Gulf Cooperation Council. The kingdom is the world’s largest oil exporter.
“We will work towards moderating the price,” al-Naimi said. “We will meet the market demands fully.”
The world economy will grow 3.3 percent this year, the slowest pace since the 2009 recession, and 3.6 percent next year, the IMF said today. The figures compare with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013.
The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent.
“Current prices are far too high for the global economic recovery,” Fatih Birol, the International Energy Agency’s chief economist, said at a press conference in London today. The agency, whose members hold strategic oil reserves to be used in a supply crisis, remains ready to act if necessary, Birol and Maria van der Hoeven, executive director of the IEA, said at the conference.
German Chancellor Angela Merkel used her first visit to Greece in five years today to maintain pressure on Greek Prime Minister Antonis Samaras to meet austerity pledges, proclaiming her desire to keep the country in the euro. At stake is Greece’s membership in the 17-nation euro and the payment of 31 billion euros ($40 billion) from bailout commitments first made in 2010.
Europe’s debt crisis, which began in Greece three years ago, has cut the continent’s economic growth and energy demand. Spain is considering asking for help and Cyprus is in talks for a lifeline, following Ireland, Portugal and Spanish lenders.
U.S. crude supplies probably rose last week after output climbed to the highest level in more than 15 years and imports increased. Stockpiles probably rose 1.5 million barrels in the seven days ended Oct. 3, according to the median estimate of nine analysts surveyed by Bloomberg before an Energy Department report on Oct. 11.
Crude production rose 11,000 barrels a day to 6.52 million in the week ended Sept. 28, the most since December 1996, the department said last week. Total fuel demand fell 0.3 percent to 18.3 million barrels a day in the four weeks ended Sept. 28, the lowest level since April.
“Brent is more sensitive to geopolitical risk than WTI,” McGillian said. “We’re also seeing the impact of crude oil production rising to a 15-year high here while fuel demand remains anemic. These factors are depressing WTI.”
Electronic trading volume on the Nymex was 650,959 contracts as of 3:15 p.m. Volume totaled 422,895 contracts yesterday, 18 percent below the three-month average. Open interest was 1.56 million.