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Source:FuelFix
HOUSTON —Continued global conflict in Syria sent oil higher early Tuesday, after Turkeydowned a Russian plane officials said had crossed into the country’s airspace.
The news wasa reminder to traders that the crude oil glut weighing on oil prices has beenbuilt in part by an excess of oil flowing from some of the world’s mostvolatile regions, and that it could easily be reversed by a major outage. Italso adds another layer of uncertainty regarding how the 28-member NorthAtlantic Treaty Organization — which includes Turkey — will react toescalated tensions with Russia, one of the world’s largest oil and gasproducers.
U.S. oilfutures gained 3.4 percent to $43.17 per barrel in early trading Tuesday. Thelast time oil settled higher than $43 per barrel was on Nov. 10.
Still, pricesremain near multi-year lows and on the verge of the $40 per-barrel mark thatoil traders briefly crossed last week. For the past few weeks, the narrative onthe markets has been more about a continued oversupply of crude oil, and lessabout fears that the flood heading to markets could be stemmed by conflict.
“I don’texpect that in the short term you’re going to see any chances in the supply-demanddynamic, but it certainly adds another layer of geopolitical risk,” said AndyLipow, of consulting group Lipow Oil Associates LLC.
Also onTuesday, the Commerce Department revised upward its estimate for the U.S.economy’s growth from 1.5 percent to 2.1 percent. Many economists had forecastan upward revision, and the U.S. dollar fell slightly on the news. Oil istraded in dollars, and cheaper dollar tends to make oil more expensive.
“It’s not acomplete surprise,” said Tim Evans, a commodities expert at Citi Futures. “Itprobably does keep the Fed. on track to bump rates in December.”
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