Oil jumps further after big rally on increased Mideast risk
Crude oil futures extended gains on Wednesday after prices hit two-week highs in the previous session as tension mounted in the Middle East following Turkey’s downing of a Russian warplane.
Brent LCOc1 extended its gains by 20 cents to $46.32 a barrel by 0659 GMT, reversing an earlier fall on profit-taking. The benchmark had settled up $1.29 at $46.12 on Tuesday, after hitting its highest since Nov. 11 at $46.50.
U.S. West Texas Intermediate (WTI) futures CLc1 rose 11 cents to $42.98 a barrel. WTI finished up $1.12 on Tuesday at $42.87, having touched $43.46 during the session, also its highest since Nov.11.
“In Asian hours you are seeing some profit-taking … but bullish sentiment is continuing,” said Daniel Ang, an investment analyst at Phillip Futures said, referring to the increased geopolitical risk in the oil-producing Middle East.
“We expect economic data to further support this momentum,” Ang said separately in a Wednesday note.
Phillip Futures sees strong resistance for January Brent and WTI at $46.49 and $43.49, respectively, which would likely be broken in the “most bullish scenario”, the note also said.
Turkey shot down a Russian warplane near the Syrian border on Tuesday, saying the jet had violated its air space. Russian President Vladimir Putin said the plane had been attacked inside Syria and warned of “serious consequences” for what he termed a stab in the back administered by “the accomplices of terrorists”.
U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while NATO Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey.
Obama and Hollande also pressed Russia on Tuesday to focus its attacks in Syria on Islamic State (IS) militants.
The United States and France separately agreed to ramp up military operations against IS in Syria and Iraq and coordinate intelligence on domestic threats.
The increased military operations against IS and the crisis between Turkey and Russia, like most confrontations that take place in the Middle East, have raised worries about disruption to oil production and shipments.
Meanwhile, ANZ said in a note on Wednesday that investor sentiment had improved modestly as an upcoming OPEC meeting raised some hope of modest production cuts after Saudi Arabia had spoken about cooperating with other producers to maintain price stability.
Data from industry group the American Petroleum Institute data showed that U.S. crude stocks rose by 2.6 million barrels in the week to Nov. 20, more than double analysts’ expectations for an increase of 1.2 million barrels.
Source: Reuters
