West Texas Intermediate crude climbed to its highest in a week as President Barack Obama sought diplomatic backing at the G-20 summit in Russia for a military strike on Syria.
Futures advanced as much as 1.1 percent as Obama began meetings in St. Petersburg where he is seeking to persuade other leaders of the Group of 20 nations to support armed intervention in response to Syria’s alleged use of chemical weapons. Crude extended gains after U.S. employers added fewer jobs than forecast in August, damping speculation the Federal Reserve will cut bond purchases this month.
“A military strike is not fully priced in,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich who estimates Brent may rally to $127 a barrel should an attack be launched. “It’s only a question of time until the U.S. is active as Obama is really committed to lead a military strike and can’t afford to lose face.”
WTI for October delivery advanced as much as $1.20 to $109.57 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Aug. 29, and was at $109.49 as of 1:46 p.m. London time. Prices are up 1.7 percent this week for a second weekly advance.
Brent crude for October settlement rose 53 cents to $115.79 a barrel on the ICE Futures Europe exchange. The volume of all futures traded was about 32 percent below the 100-day average. Brent was headed for a fourth weekly gain, the longest rising streak since February.
The European benchmark crude was at a premium of $6.39 to WTI, compared with $6.89 yesterday.
Crude advanced as the dollar weakened following the Labor Department report that showed payrolls rose by 169,000 in August, compared with the 180,000 median forecast of 96 economists surveyed by Bloomberg. The U.S. currency retreated 0.3 percent to $1.3155 per euro, after earlier reaching its strongest level since July.
The G-20 is hosted by Russian President Vladimir Putin, an ally of Syrian President Bashar al-Assad, who has cast doubts on U.S. evidence that Assad’s regime used chemical weapons on residents in a suburb of Damascus in August. Crude climbed to the highest in more than two years last week on concern an escalation of the conflict in Syria may disrupt the region’s oil supplies.
The Middle East accounted for about 35 percent of global oil production in the first quarter of this year, according to the International Energy Agency. Syria borders Iraq, the largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Obama will seek approval from Congress before taking action against Syria after the Senate Foreign Relations Committee voted for a restricted operation. U.S. lawmakers are scheduled to reconvene on Sept. 9 after a five-week break.
“Syria is the focus and the way that the incursion occurs will dictate how oil will behave,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney who predicts investors may sell WTI at about $112.50 a barrel. “There will be a spike. The event to push it through $112.50 is going to have to be pretty huge.”
WTI may rise next week as plans for an attack gather pace amid improving economic data and reduced stockpiles, a Bloomberg survey showed.
Sixteen of 36 analysts and traders, or 44 percent, forecast that WTI crude will climb through Sept. 13. Fifteen respondents predicted a slide and five said there will be no change. Last week, 43 percent in the survey estimated futures will increase.