- WTI futures slipped to $40.06 earlier, least since August
- Islamic State positions are bombed after Paris terror assaults
Oil rebounded in New York after failing to drop below $40 a barrel as France dropped bombs on Syria, heightening tensions in Europe and the Middle East in the wake of deadly terrorist attacks in Paris.
West Texas Intermediate crude advanced 2.5 percent after touching $40.06, the least since August when prices tumbled to a six-year low. French President Francois Hollande vowed to boost security spending, limit constitutional protections and win a war against Islamic terrorism. Warplanes bombed Islamic State’s nerve center in Raqqa after France said Europe’s worst terror attack in a decade was directed from Syria.
"The speculators are trying to call a bottom," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by phone. "When the selling dried up the speculators jumped back in."
Crude has slid 45 percent in the past year amid signs the global glut will persist as the Organization of Petroleum Exporting Countries continues to pump above its collective quota and Russian production climbs to post-Soviet highs. Oil stockpiles have expanded to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, the International Energy Agency said Nov. 13.
WTI for December delivery rose $1 to settle at $41.74 a barrel on the New York Mercantile Exchange. It was the biggest gain since Nov. 3. Futures dropped 8 percent last week. The volume of all futures traded was 63 percent above the 100-day average at 2:52 p.m.
Brent for January settlement increased 9 cents to end the session at $44.56 a barrel on the London-based ICE Futures Europe. The December contract expired Friday after falling 1 percent to $43.61. The European benchmark oil closed at a $1.77 premium to January WTI futures.
Ten French fighter jets struck targets Sunday evening in Syria, hitting a command base, according to the Defense Ministry. Islamic State said the Paris attacks, which killed at least 129 people and injured scores more, were payback for France’s military involvement in the Middle East. The bombing runs were among a series of strikes by U.S. and allied forces. One destroyed 116 fuel trucks used by the organization near the Iraqi border.
"The Paris attacks cut both ways as far as the oil market is concerned," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone. "It’s going to increase the geopolitical premium as oil infrastructure gets caught in the cross hairs of our warplanes. On the other hand, it’s negative for the euro-zone economy, which could lower demand while we are dealing with tremendous oversupply."
Total oil stockpiles in developed nations rose by 13.8 million barrels in September, a month when they typically decline, an International Energy Agency report showed Friday. There are signs some fuel-storage depots in the Eastern Hemisphere have been filled to capacity, the IEA said.
In the U.S., drillers put rigs back to work for the first time since August, data from Baker Hughes Inc. show. Rigs targeting oil rose by 2 to 574 after more than 100 were idled since the start of September, Baker Hughes said on its website Nov. 13. The nation’s crude stockpiles remain more than 100 million barrels above the five-year seasonal average after inventories rose for a seventh week through Nov. 6, according to data from the EIA.