Oil twitches higher on Middle East nerves

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Oil futures gained on Tuesday after an Israeli missile test in the Mediterranean jangled traders' nerves on edge over any wider conflict in the region threatening already stretched supplies.

Brent crude was up 79 cents at $115.12 a barrel at 1053 GMT. U.S. oil fell 42 cents to $107.23 from Friday's settlement, as due to the Labor Day holiday there was no Monday settlement for the U.S. benchmark.

Brent rose by more than $1 per barrel after a Russian media report cited Russia's defence ministry saying it had detected two ballistic "objects" fired in the Mediterranean.

Israel said it carried out a test of a missile, used as a target in a U.S.-funded anti-missile system, in the Mediterranean on Tuesday.

This returned investor focus to the potential of supply disruption in the region if the Syrian war widens.

"There's a lot of uncertainty and it's reignited concern people feel about the Middle East, particularly if the civil war spills over Syria's borders," said Christopher Bellew, broker at Jefferies Bache.

Actual as well as potential supply disruptions were also keeping prices elevated.

Libyan exports are 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.

"Logic calls for continued disruption," said Bjarne Schieldrop, analyst at SEB in Oslo.

The economic backdrop was also strongly supportive of prices.

China's services sector grew steadily in August as domestic demand picked up, official data showed on Tuesday, adding to signs that government measures have started to steer the world's second-largest economy out of its longest slowdown.

This followed strong manufacturing data from China and Europe the previous day.

Market participants are waiting for the U.S. Institute of Supply Management to publish its bellwether PMI for U.S. factories later on Tuesday.

Investors are also awaiting U.S. jobs data on Friday and a clearer indication from the Federal Reserve on the timing of a rollback in its monetary stimulus to gauge the outlook for oil. (Editing by William Hardy)



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


5M Series

Five M Series Models: 5065M, 5075M, 5085M, 5100M, and 5115M (65-115 hp). If you spend a lot of time on ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight