Oil up after Israel missile test, signs of economic strength

Reuters
A worker fills a tank with subsidized fuel at a fuel station in Jakarta April 18, 2013. REUTERS/Beawiharta/Files
.

View photo

A worker fills a tank with subsidized fuel at a fuel station in Jakarta April 18, 2013. REUTERS/Beawiharta/Files

By Anna Louie Sussman

NEW YORK (Reuters) - Brent crude oil futures rose more than $1 per barrel on Tuesday as U.S. lawmakers voiced support for military action against Syria, and oil prices also drew support from improving economic data in the United States and China and concerns over crude oil supply.

President Barack Obama urged quick congressional action authorizing the use of military force against Syria and won support of leaders from both parties in the House of Representatives for limited strikes against President Bashar al-Assad's forces.

"We're definitely increasing the odds of an attack," said Phil Flynn, an analyst at the Price Futures Group in Chicago, Illinois.

"The U.S. is better prepared for a disruption than Europe because of our (domestic) production."

U.S. crude got an early boost from reports showing demand picked up in the U.S. manufacturing sector and steady growth in China's services sector, adding to other positive signals from the world's two biggest economies.

U.S. manufacturing data provided "further evidence of the global economic recovery," said John Kilduff, a partner at Again Capital LLC, noting it followed encouraging reports from the euro zone and the United Kingdom.

He also said outages in Libya, South Sudan, Iraq and Nigeria were combining to tighten supply. Outages amount to 3.15 millions of barrels per day (bpd), about 3.5 percent of daily world oil demand of 90 million bpd.

"If you add the outages up, it's a significant amount of oil," said Kilduff.

Brent crude was up $1.38 to $115.71 a barrel at 12:58 p.m. EDT (1758 GMT). It hit a session high of $115.87.

U.S. oil reached $108.25, up 60 cents from Friday's settlement. There was no Monday settlement for the U.S. benchmark due to the U.S. Labor Day holiday.

A possible missile strike on Syria returned investor focus to a potential supply disruption in the region, but traders noted existing supply concerns already supported prices.

Libyan exports were running at below 10 percent of export capacity at below 100,000 barrels per day, according to a Reuters estimate, as armed groups tighten their grip on the sector.

Investors awaited U.S. jobs data on Friday and a clearer indication from the U.S. Federal Reserve on the timing of a rollback in its monetary stimulus to gauge the outlook for oil. (Additional reporting by Simon Falush in London; Editing by Jeffrey Benkoe and David Gregorio)

View Comments (0)