West Texas Intermediate crude traded at the highest price in more than nine months because of renewed speculation that unrest in Syria will spread to other parts of the Middle East and disrupt supplies.
Futures gained as much as 0.9 percent after rising the most in five days on June 14, capping a second weekly gain. U.S. President Barack Obama was said to authorize arming Syrian rebel groups. Iranian President-elect Hassan Rohani’s vow to improve ties with the world carried him to a surprise first-round election win. Stronger summer demand and supply risks continue to support the market, Morgan Stanley said in a research note.
“We’ve seen prices rising over the past week primarily over geopolitical worries,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “We are settling in for a range-bound day of trading and any major moves will have to be geopolitical related.”
WTI for July delivery was at $98.23 a barrel, up 38 cents in electronic trading on the New York Mercantile Exchange as of 12:59 p.m. London time. It had climbed as high as $98.74, the most since Sept. 14. The volume of all futures traded was 62 percent above the 100-day average. The contract rose 1.2 percent to $97.85 on June 14, advancing the most since June 7 to the highest settlement since Jan. 30.
Brent for August settlement gained 21 cents to $106.14 a barrel on the London-based ICE Futures Europe exchange. That’s the most since April 9. The European benchmark grade was at a premium of $7.71 to WTI compared with $7.86 on June 14.
Crude supplies are being affected by the escalating U.S. involvement in Syria, a reduction in the availability of North Sea oil due to the Ekofisk field being halted and increased buying from South Korea, Morgan Stanley said today.
Production at the Oseberg Field Center in the North Sea was halted earlier today due to a gas alarm, Ola Anders Skauby, spokesman for the operator Statoil ASA, said by phone from Stavanger in Norway.
The U.K. government is sticking with plans to give non-lethal support to the Syrian opposition, Prime Minister David Cameron said yesterday at a press conference in London. The U.S. and U.K. say President Bashar al-Assad’s departure is essential to any political transition, while Russia, another member of the G-8 nations, is a long-time ally and arms supplier to Syria.
President Obama is authorizing lethal military aid to rebel groups under a classified order instructing the Central Intelligence Agency to arrange delivery of the weapons, a U.S. official familiar with the decision said last week, asking not to be identified discussing the move.
Western countries signaled an interest in engaging with Rohani after he captured about 51 percent of the vote on June 15. The British Foreign Office urged him to set a new course for Iran, and the European Union’s foreign policy chief, Catherine Ashton, said she hoped his win will lead to a “swift diplomatic solution” to the standoff over the nuclear program.
Iran, the sixth-largest producer in the Organization of Petroleum Exporting Countries, is under U.S. and European Union sanctions aimed at pressuring its leaders to abandon aspects of its nuclear program, which Iran says is for civilian use.
“The market is responding to the news that the U.S. is going to arm the Syrian opposition,” said Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management. “The Iranian elections are calming the geopolitical tensions.”
WTI’s rally is stalling near technical resistance along the 30-day upper Bollinger Band, at about $97.95 a barrel today, according to data compiled by Bloomberg. Crude also fell in early April after reaching that indicator. Sell orders tend to be clustered around chart-resistance levels.
Hedge funds raised bullish WTI oil bets to a 15-month high. Money managers increased net-long positions, or wagers on climbing prices, by 9.5 percent in the week ended June 11, according to the Commodity Futures Trading Commission’s June 14 Commitments of Traders report. It was the highest level since March 2012.