Oil rises on Middle East tensions, weaker dollar
US crude stocks likely to show weekly build: Survey
LONDON: Oil prices rose yesterday as tensions in the Middle East escalated following the downing of a Russian-made fighter jet near the Syrian-Turkish border and a weaker US dollar provided incentive for investors to buy more oil. Brent futures for January were up 44 cents to $45.27 a barrel at 1055 GMT, a 1 percent rise on Monday’s close. West Texas Intermediate (WTI) crude was up 33 cents at $42.08.
“News of a military jet crashing in Syria is a reminder that there is still substantial risk in the Middle East,” said Bjarne Schieldrop, the Olso-based chief commodities analyst at SEB. Turkey said it had downed a Russian-made fighter jet near the Syrian border after it violated Ankara’s airspace. A weaker US dollar, easing from an eight-month peak against a basket of currencies, also lent support as some investors found it cheaper to buy the dollar-denominated commodity.
They also awaited US crude stocks data, with expectations of a small increase.
US commercial crude oil stocks likely gained 1.1 million barrels for the week ended Nov 20, according to a preliminary Reuters survey of five analysts on Monday. A rise would mark a ninth consecutive weekly gain.
Some traders also prepared positions ahead of a long holiday weekend in the United States. “There is likely to be a risk premium for the long Thanksgiving weekend,” said Olivier Jakob, oil analyst at Petromatrix in Zug, Switzerland.
Analysts at BNP Paribas said they expected U.S. WTI crude futures to recover slightly this winter. “We still think that a low 40s NYMEX WTI is a floor from which the market can rally through the winter,” they wrote in a research note.
“Thereafter, the summer of 2016 presents down risk for oil prices as OPEC pursues its current policy, US production stabilizes and Iran delivers more barrels to the market.” Saudi Arabia led a shift by the Organization of the Petroleum Exporting Countries (OPEC) in November 2014 to defend market share against competing supplies, rather than cut output to prop up prices. The Saudi cabinet said on Monday it was ready to cooperate with OPEC and non-OPEC countries to achieve market stability, days before OPEC meets to review its policy. — Reuters CAIRO: Italy’s Edison will complete its seismic survey of the area surrounding Egypt’s Zohr gas field next month, the head of Egypt’s General Petroleum Corp (EGPC) told reporters yesterday. “The discovery of the Zohr gas field helped accelerate the companies’ research and exploration,” Mohamed Al-Masry said on the sidelines of a conference in Cairo. The seismic survey was previously expected to be completed after 11/2 years. Al-Masry also said EGPC had met with ENI, which discovered the Zohr gas field in August, to negotiate the price of the gas that will be extracted. “The price is linked to a price formula with a minimum of $4 per million BTU and a limit of $5.88 per million BTU, and the price will not exceed that,” he said.