WTI Crude Advances After Syria Blames Israel for Attacks

West Texas Intermediate crude erased gains and fell from the highest level in a month after air strikes in Syria renewed concern that turmoil in the Middle East may worsen and disrupt supply from the biggest producing region.

WTI futures climbed 1.6 percent in New York before dropping as much as 73 cents. Syria’s state news agency said Israeli aircraft attacked a military research center on the outskirts of Damascus yesterday. The offensive was a “declaration of war,” Syria’s Deputy Foreign Minister Faisal al-Mekdad told CNN. Israel didn’t confirm involvement. WTI capped a second weekly gain May 3 after U.S. employment rose more than forecast.

“Political risk is back on the map,” Thina Saltvedt, an Oslo-based analyst at Nordea Bank AB, said today by telephone. “What’s happening in Syria has got the market’s attention.”

WTI for June delivery declined as much as 70 cents to $94.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $95 at 1:55 p.m. London time. The volume for all contracts traded was 126 percent the 100-day average. Futures increased $1.62 to $95.61 on May 3, the highest close since April 2. Prices climbed 2.8 percent last week.

U.K. Holiday

Brent for June settlement was unchanged at $104.19 a barrel on the London-based ICE Futures Europe exchange, after rising by as much as $1.30, or 1.3 percent. The front-month European benchmark was at a premium of $9.12 to WTI futures. It ended the session on May 3 at $8.58, the narrowest differential based on closing prices since December 2011. Markets in the U.K. are closed for a public holiday.

“Prices jumped on risk premiums after the Syrian explosions,” Bjarne Schieldrop, the head of commodity research at SEB AB, said by phone from Oslo. “With the U.K. closed, it may be hard to move prices too much.”

The attack opens doors to all possibilities and Syria will use “any means” to protect its people, Omran al-Zoubi, the country’s information minister, said in a statement on state TV. Syria deployed rocket batteries directed toward Israel, the pro-government Damas Post website said.

The Israeli army said it deployed two Iron Dome missile defense systems in the country’s north. The Middle East accounted for 33 percent of global crude output in 2011, according to BP Plc’s Statistical Review of World Energy.

U.S. Unemployment

American employers took on more workers than forecast in April and the jobless rate fell unexpectedly to a four-year low of 7.5 percent, U.S. Labor Department figures showed on May 3. The data reflected confidence in the outlook for the world’s biggest economy as payrolls expanded by 165,000, an addition of 25,000 workers more than the median forecast of expectations from 90 economists surveyed by Bloomberg. The April results followed an upwardly revised 138,000 increase in March.

Saudi Arabian Oil Co., the largest crude exporter, raised the June premium used to set official selling prices for its Arab Light blend for buyers in Asia and trimmed discounts on all grades to the Mediterranean and Europe.

The state-owned producer known as Saudi Aramco increased the monthly premium for the Light blend by 20 cents to $2 a barrel more than the average of Oman and Dubai grades, the company said yesterday in an e-mailed statement. Aramco cut the discount for Arab Heavy to Asia in half, narrowing it to 70 cents less than the Gulf benchmarks.

WTI’s rally may stall as futures approach a technical resistance level along a downward-sloping trend line going back to September, according to data compiled by Bloomberg. This line, around $96.75 a barrel today, connects to the high of January and is where prices halted advances in February and March. Sell orders tend to be clustered near chart-resistance levels.

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