The price of oil rose above $108 a barrel Thursday as traders remained wary of developments in Syria even as global crude supplies were forecast to rise and fresh data showed only a slight drop in U.S. oil inventories.
By early afternoon in Europe, benchmark oil for October delivery was up 82 cents to $108.38 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 17 cents to close at $107.56 on the Nymex on Wednesday.
While the American Petroleum Institute released data Tuesday showing U.S. crude supplies fell 2.9 million barrels to 359.5 million barrels for the week ending Sept. 6, Wednesday's release of the U.S. Energy Department's estimate — the market benchmark — put the drop at just 219,000 barrels.
The slight gain in oil prices on Wednesday and Thursday followed losses Monday and Tuesday that totaled $3.14 a barrel, the result of diplomatic efforts to avoid a U.S. strike against Syria. The Obama administration has threatened action against President Bashar Assad, whom the U.S. says is responsible for a deadly chemical weapons attack against civilians.
Syria is not a major oil producer, but oil traders say the possibility of a wider conflict could interrupt production and shipping routes in the Middle East and cause prices to rise.
"Prices are well supported around these levels as the uncertain outlook has prompted some buying," said a report from Sucden Financial Research in London, noting that "investors remain cautious to any potential near-term tightness in supply."
Developments in the Middle East notwithstanding, the International Energy Agency said global crude supply "looks set for an upward jump" in the last quarter of the year, bolstered by the end of seasonal maintenance on oil rigs in the North Sea and the Gulf of Mexico; increased oil output in North America; and strong production in Saudi Arabia.
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