Oil jumps as Turkey-Syria dispute rages; corn soars

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Oil prices jumped on Thursday on escalating Turkish-Syrian tensions and lower crude output expected from key production fields in the North Sea, while corn hit three-week highs as government data pointed to the smallest crop in six years.

Gold rose, snapping four days of declines, as the dollar's slide against the euro led to upward adjustments in commodities priced in the U.S. currency . Copper bounced from a two-week low.

Soft commodities bucked the uptrend across raw materials, with sugar, cocoa and coffee falling due to ample supply versus poor demand prospects.

The Thomson Reuters-Jefferies CRB index, a commodities bellwether, rose 0.6 percent after gains in 13 of its 19 components. Corn outperformed the pack, rising more than 5 percent.

Natural gas was another strong performer, climbing nearly 4 percent and for a fourth straight day, after a government report showed a weekly inventory build well below market expectations.

MIDDLE EAST TENSIONS LIFT OIL

Oil prices rose by about 1 percent. London's Brent crude hovered above $115 a barrel as of 1:45 p.m. EDT (1745 GMT) after setting a three-week high at $116. U.S. crude, the weightiest CRB component, traded near $92.

Oil ran up after NATO member Turkey forced a Syrian passenger plane to land and seized what it suspected was military equipment being ferried from Russia to Syria and the embattled government of President Bashar al-Assad. Moscow accused Turkey of endangering Russian lives.

"The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region," said Bjarne Schieldrop, analyst at SEB in Oslo. Oil prices also drew support from worries about shrinking output from North Sea fields. Reuters calculations showed North Sea crude oil output from 12 production streams was set to fall by about 1 percent in November.

CORN SURGES ON USDA REPORT

Chicago-traded corn futures surged after the U.S. Department of Agriculture estimated the drought-plagued corn crop in the country as the smallest in six years. The USDA also slashed its forecast for global grain ending stocks.

U.S. corn's front-month contract jumped 5.3 percent to $7.76 a bushel, its highest level since Sept. 17.

Soybeans rallied by about 2 percent to above $7.70 a bushel after the USDA said the so-called stocks-to-use ratio for the oilseed would be the tightest since the mid-1960s. Wheat futures gained about 2 percent to hover above $8.85 a bushel.

The USDA left unchanged the number of U.S. harvested acres, keeping the door open for further declines as farmers abandoned fields that would produce no grain due to the most extensive drought in 56 years in the world's biggest corn, soybean and wheat exporter.

"The most glaring thing that I saw was that they didn't address the harvested acres, they didn't lower the harvested area, and at some point this will have to be addressed," Citigroup market strategist Sterling Smith said.

The fundamentals for corn were particularly bright, he said. "The ending stocks numbers are all that we're going to have to work with now and I think they'll have to lower those even more."



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