Crude oil smokes higher on Syrian Turkey tensions

Investing.com - Crude oil futures smoked higher during  U.S. afternoon hours Tuesday, as tension between Syria and Turkey mounted, underpinning fears over a disruption to supplies from the region.

Hopes for fresh easing measures from China also contributed to gains, overshadowing concerns over slowing global growth.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD92.30 a barrel during U.S. afternoon trade, rallying 3.32%. 


Turkey confirmed that it was deploying at least 25 additional F-16 fighter jets to an airbase close to the border with Syria, fuelling fears the ongoing conflict in Syria could spread to other countries in the region.

Tensions between the two countries have been growing since Syrian shells last week killed five people in a Turkish border village.

Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 52% of proved reserves in 2011.

Prices found support during the Asian trading session after the People’s Bank of China injected CNY265 billion into the money market, in a bid to ease tight liquidity conditions.

The move raised optimism for further supportive policy measures out of China, the world’s second largest oil consumer after the U.S. 

Oil’s gains came despite lingering worries over the health of the global economy. The International Monetary Fund cut its 2012 global growth forecast earlier in the day and warned of even slower expansion unless officials in the U.S. and Europe address threats to their economies. 

The IMF said that the world economy will grow 3.3% this year, the slowest since the 2009 recession, and 3.6% next year, compared with July predictions of 3.5% in 2012 and 3.9% in 2013. 

Investors also remained cautious amid uncertainty over how soon Spain may formally request a bailout lingered after euro zone finance ministers said Monday that Madrid did not need external financial aid yet.

Meanwhile, German Chancellor Angel Merkel said that Greece was on a “tough path” following talks with Prime Minister Antonis Samaras in Athens, but one which she believed would pay off.

The talks came amid ongoing uncertainty over whether international creditors will extend loans to Greece, as the country struggles to meet deficit reduction targets.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery gained 1.2% to trade at USD113.14 a barrel, with the spread between the Brent and crude contracts standing at USD22.75 a barrel, the widest level since October 2011.

London-traded Brent prices have been drawing support from a combination of lingering concerns over a disruption to supplies from the Middle East and worries over declining production in the North Sea-region.