Aug. 27 (Bloomberg) -- Gasoline jumped the most in six weeks, following crude higher on concern tensions in Syria will escalate into a wider military conflict that may disrupt oil supply from the Middle East.
Futures rose 2.8 percent and West Texas Intermediate crude reached an 18-month high. The U.S., France and Britain moved closer to a military strike against Syria, laying the legal groundwork to justify action. Syrian ally Iran’s Foreign Ministry warned that a U.S. attack on Syria would drag the whole region into conflict.
“The entire complex is finding a bid on rising political risk and the increased likelihood of a military strike on Syria,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “All these countries are taking sides.”
Gasoline for September delivery rose 8.24 cents to $3.0341 a gallon on the New York Mercantile Exchange, the highest settlement this month and the biggest one-day gain since July 12. Trading volume was 4.3 percent above the 100-day average at 3:13 p.m. Prices are down 0.3 percent in August.
WTI for October delivery increased $3.09 to $109.01 a barrel on the Nymex. October Brent crude on the London ICE Futures Exchange advanced $3.63, or 3.3 percent, to $114.36, a six-month high.
“This is a market that is starved for headlines and there’s no telling how high we can go,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “If you can contain it with just a couple of bombings, I imagine a rapid correction lower.”
Any armed response would be narrowly focused on Syria’s weapons capabilities and wouldn’t be aimed at deposing Syrian President Bashar al-Assad, U.S. and U.K. officials said. The introduction of troops isn’t being considered, nor is imposition of a no-fly zone over Syria, according to a U.S. official who asked for anonymity to discuss internal deliberations.
“Traders are concerned that what looks like imminent military action in Syria could further destabilize the region,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “It’s a region that’s been on tenterhooks for weeks now with concern there could be potential for some dislocation of supply.”
The motor fuel’s crack spread versus West Texas Intermediate crude rose 19 cents to $13.32 a barrel. The fuel’s premium over Brent narrowed 35 cents to $7.97.
Pump prices, averaged nationwide, rose 0.1 cent to $3.542 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 20.8 cents below a year earlier.
Ultra-low-sulfur diesel for September delivery rose 8.19 cents, or 2.7 percent, to $3.1609 a gallon, a six-month high. Trading volume was 13 percent above the 100-day average. Prices are up 3.9 percent this month.
ULSD’s crack spread versus WTI widened 36 cents to $23.95 a barrel. The premium over Brent fell 18 cents to $18.60.
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