Crude rally capped by diplomatic approach to Syria confrontation
Oil futures rallied Wednesday, a day after US President Barack Obama decided to hold off on a military campaign against Syria. The American and global benchmarks advanced at least 0.2 percent after posting more impressive gains earlier in the day. Crude’s rally was capped by growing support for a diplomatic solution to the Syrian conflict, led by Russia’s proposal to disarm Syria’s chemical weapons arsenal.
West Texas Intermediate for October delivery advanced 31 cents to $107.70 a barrel after rising as much 61 cents in the New York Mercantile Exchange. On Tuesday the contract fell almost 2 percent to $107.39, its lowest level in one week. Earlier in the week the American Petroleum Institute reported crude inventories in the US declined by close to 3 million barrels last week.
Brent for October settlement rose from a two-week low on a gain of more than 0.3 percent. The global benchmark ended the New York session at $111.62 a barrel. Trade volume for all futures was 10 percent higher than the three-month moving average.
Last week marked Brent’s fourth consecutive week of gains as fears of a potential supply shortage sent crude prices soaring. Escalating tensions in Egypt and Syria have gripped the markets in recent months. Concern reached a tipping point several weeks ago when Barack Obama said he had reached a decision to launch missiles at the military forces of Syrian President Bashar al-Assad.
Crude prices likely haven’t seen their yearly highs yet, despite Obama’s decision to pursue a diplomatic agenda. The war in Syria has raged on for almost two and a half years, and has claimed the lives of 100,000 people. It has escalated sectarian tensions in the Middle East and recruited combatants from all over the world. Syria will continue to weigh on the financial markets, and present policymakers with unique challenges.
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