West Texas Intermediate crude snapped a three-day gain. Syrian government forces started an offensive against rebels, renewing concern that conflict may destabilize the Middle East.
Futures declined in New York after rising for a third day on May 17. Government forces retook most of the strategic city of Al-Qusair in central Syria, state-run SANA news agency said. Iraq resumed crude exports via Turkey after a bomb attack targeted an oil pipeline on May 17. Hedge funds and other money managers raised bullish bets on Brent to their highest level in six weeks, according to data from ICE Futures Europe.
“Syria is a microcosm of the unrest across the Middle East and could spread to other countries,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.
WTI for June delivery dropped as much as 69 cents, or 0.7 percent, to $95.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at $95.50 at 12:42 p.m. London time. The more-active July future slid 53 cents to $95.47. Front-month prices increased 86 cents to $96.02 on May 17, the highest close since May 10.
Brent for July settlement dropped 53 cents to $104.13 a barrel on the London-based ICE exchange. The front-month European benchmark was at a premium of $8.37 to WTI, up from $8.35 on May 17.
The main opposition movement, the National Syrian Coalition, warned in a statement yesterday that there may be a “civilian massacre” in Al-Qusair. It said President Bashar al-Assad’s troops have leveled homes with artillery and rocket fire, while the air force provided cover for Hezbollah fighters.
“Traders always get nervous when these kinds of things are going on, as Middle East tension plays on prices,” said Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management. “If fighting in Syria spills over into Iraq and interrupts production there, that would be problematic.”
Brent’s rally is stalling as prices approach technical resistance along the 50-day moving average, according to data compiled by Bloomberg. Futures halted an intraday advance on May 17 near this indicator, around $105.05 a barrel today. Sell orders tend to be clustered close to chart resistance levels.
Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, shipped 7.42 million barrels a day in March, down 30,000 barrels from February, figures published yesterday from the Joint Organizations Data Initiative show. Angola and Nigeria both increased shipments, with Angola exporting 1.74 million barrels a day, up from 1.59 million, to the highest in three years, according to the data.
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.