Crude prices rose yesterday as fighting in Syria intensified but remained on course to end the week largely unchanged as a hurricane was seen as less likely to affect US oil facilities.
Hurricane Joaquin, which on Thursday had prompted fears of storm damage to US East Coast oil installations, was downgraded and is now seen as less likely to pose a major threat, the US National Hurricane Centre said.
Still, US crude was 85 cents higher at $45.59 barrel by 0700 GMT, after settling 35 cents lower in the previous session.
US gasoline futures first rallied then slipped on Thursday to end a volatile session flat at $1.3668 a gallon.
We continue to see weaker fundamentals drive crude oil prices lower in the short term
Global benchmark Brent was 67 cents higher at $48.36 a barrel. The contract had closed the previous session down 68 cents.
Traders said liquidity was low during Asian trading hours due to China’s National Holiday which lasts until October 7 but that the active dealers were pricing in a political risk premium into oil markets over Syria, where Russia and the US are carrying on bombing campaigns.
The situation was complicated by the arrival of hundreds of Iranian troops in Syria to join a major ground offensive in support of government troops, a sign the civil war is turning still more regional and global in scope.
US crude production unexpectedly rose last week despite a drop in active drilling rigs.
“Fundamentals remain weak,” analysts at ANZ said in a note to clients.
“We continue to see weaker fundamentals drive crude oil prices lower in the short term.”
Asian stocks edged up yesterday and looked likely to end the week with tiny gains, although the outlook remained grim, while the dollar crept higher.
BMI Research, a subsidiary of rating agency Fitch, said that although it expected a short-term price rise in crude due to a dip in US production over the coming months, the longer-term outlook remained weak.
“Any price recovery though will be short-lived as the pipeline of major projects coming online globally, high stock levels and new Iranian supply will pressure Brent prices over 2016,” BMI said.