West Texas Intermediate crude rose to a seven-week high after the dollar declined and turmoil in the Middle East bolstered concern that shipments from the region will be disrupted.
Futures climbed 0.7 percent as the Dollar Index, which tracks the U.S. currency against those of six major trading partners, fell from the highest level since July 2010. Syrian government forces battled rebels in an attempt to recapture Al-Qusair, a city near the highway linking the capital of Damascus to the coast that has been a conduit for weapons from Lebanon to the rebels.
“The dollar is down some today, which is pushing the oil market higher,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “There continue to be geopolitical problems in the Middle East that are lending support.”
WTI for June delivery rose 69 cents to $96.71 a barrel on the New York Mercantile Exchange, the highest settlement since April 2. It was the fourth straight gain. The volume of all contracts traded was 11 percent above the 100-day average at 3:12 p.m.
Brent for July settlement increased 16 cents to end the session at $104.80 a barrel on the London-based ICE Futures Europe exchange. Volume for all contracts was 35 percent lower than the 100-day average.
The front-month European benchmark was at a premium of $7.87 to the WTI contract for the same month. The spread shrank to $7.65 at settlement on May 13, the narrowest since January 2011 and down from a record $25.53 on Nov. 15.
WTI rose as the dollar slipped, increasing the investment appeal of raw materials denominated in the U.S. currency. The Dollar Index fell as much as 0.6 percent to 83.728.
More than 90 people have been killed in the last 48 hours of fighting over Al-Qusair, the U.K.-based Syrian Observatory for Human Rights said on its Facebook page. The dead include 56 rebel fighters and 23 members of the Iranian-backed Lebanese Hezbollah militia, who have joined President Bashar al-Assad’s forces, it said.
The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc’s Statistical Review of World Energy. Syrian oil exports, which were never among the highest in the region, have almost completely ended. Syria borders Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries.
Volume for most energy commodities was below the 100-day average as traders awaited more reports. The Federal Reserve publishes minutes of its latest meeting on May 22, the same day that Federal Reserve Chairman Ben S. Bernanke is scheduled to testify before Congress on the economic outlook.
“The market shouldn’t do much until Wednesday when Bernanke testifies to Congress and we see the Fed minutes,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The Bernanke testimony should guide the market through the balance of the week and maybe longer.”
Speculative bets that Brent prices will rise, in futures and options combined, outnumbered short positions by 130,219 lots in the week ended May 14, ICE said today in its weekly Commitment of Traders report. The gain of 6,184 contracts, or 5 percent, is a third straight weekly increase and brings net-long positions to the highest since April 2.
Money managers increased net-long positions, or wagers on higher prices, in WTI by 606 futures and options combined, or 0.3 percent, to 205,140, in the seven days ended May 14, according to the Commodity Futures Trading Commission’s May 17 Commitments of Traders report. It was the third weekly gain.
Implied volatility for at-the-money WTI options expiring in July was 20.8 percent, compared with 20.5 on May 17, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 551,805 contracts as of 3:12 p.m. It totaled 574,864 contracts in the previous session, the lowest level since April 29. Open interest was 1.75 million contracts.