West Texas Intermediate crude traded near a four-day high amid signs of economic recovery in Europe and speculation that western governments may launch a military intervention in Syria. Brent’s premium to WTI narrowed.
Futures advanced as much as 0.9 percent in New York. Economic confidence in the euro area probably rose to the highest level in 17 months in August, adding to signs that the currency bloc’s recovery from a record-long recession is gathering pace. U.K. Foreign Secretary William Hague said Britain is convinced President Bashar Al-Assad is behind last week’s chemical weapons attack in Syria, and there’s agreement with the U.S. and France on the need to respond.
“There’s a surprisingly robust economic recovery,” said Eugen Weinberg, the head of commodities research at Commerzbank AG in Frankfurt. “It’s supporting prices but not catapulting them to a new level.”
WTI for October delivery climbed as much as 95 cents to $107.37 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.51 at 12:06 p.m. London time. The contract increased 1.3 percent to $106.42 on Aug. 23, the largest gain since Aug. 9. Prices are up 16 percent in 2013.
Brent for October settlement slipped as much as 32 cents, or 0.3 percent, to $110.72 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $4.31 to WTI, narrowing for a third day. Stock markets in the U.K. are closed for a public holiday.
The U.S. concluded Syrian President Bashar al-Assad’s regime probably used chemical weaponry against civilians, calling an agreement yesterday to let United Nations inspectors review the area not credible. The Middle East accounted for 35 percent of global oil output in the first quarter of this year, International Energy Agency data show.
“There is an increased risk level now to the extent that Western nations may feel the need to take some action” on Syria, said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
Brent’s premium shrank as Libya resumed exports from the port of Brega, one of four ports where force majeure was declared amid protests that shut the facilities since the end of July. This may add about 90,000 barrels a day to current shipments of 500,000 barrels a day from the nation, a member of the Organization of Petroleum Exporting Countries.
Tropical Storm Fernand was forecast to weaken to a depression after making landfall over the Mexican state of Veracruz, the U.S. National Hurricane Center said in an advisory. It was heading west-northwest on a path over Mexico away from oil installations, according to the center’s forecast.
Atlantic storms are followed closely by energy companies and commodity traders because they can disrupt natural gas and oil production and processing and destroy crops.
An index of European sentiment rose to 93.8 from 92.5 in the previous month, according to the median of 26 economists’ estimates in a Bloomberg News survey. The European Commission publishes its economic-confidence report on Aug. 30.
Money managers reduced net-long positions in WTI crude, or wagers that prices will increase, by 2 percent to 302,762 futures and options combined in the seven days ended Aug. 20, according to the Commodity Futures Trading Commission’s weekly report on Aug. 23.
Hedge funds and other speculators boosted net-longs in Brent crude to 208,313 lots in the same period, from 193,527 in the week to Aug. 13, according to data from ICE Futures Europe.