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 Russia launched air strikes in Syria on Wednesday in its biggest
Middle East intervention in decades. The attacks raised the specter
of Washington and Moscow running air strikes in the same region, but
without coordination.
Brent crude was up $1.00 at $49.37 a barrel as of 0435 EDT and
earlier reached $49.47, its highest since Sept. 23. U.S. crude
gained $1.19 to $46.28.
"Russia's military intervention in the Syrian conflict has increased
the geopolitical risks, which is giving tailwind to the prices,"
Carsten Fritsch, analyst at Commerzbank, said.
There was also some support to prices from Hurricane Joaquin, which
was gaining strength as it moved toward the Bahamas, the National
Hurricane Center said, although forecasts were inconclusive on
whether the storm would hit the U.S.
Energy traders watch Atlantic hurricanes because they can lead to
precautionary shutdowns of Gulf of Mexico oil and gas platforms or,
in exceptional cases, damage energy infrastructure.
Signs of economic slowdown in Asia and brimming U.S. oil stocks
limited the rally. Surveys on Thursday showed activity in China's
factories shrank and manufacturers' confidence worsened in Japan.
"Given the international tension, the oil market did remarkably well
not to rally several dollars yesterday," oil broker PVM said in a
report. "Perhaps it was the U.S. oil inventory data which capped
gains."
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In a reminder that a supply glut persists, U.S. crude inventories
rose by 4 million barrels to 457.9 million in the week to Sept. 25,
more than expected, a government report said on Wednesday. [EIA/S]
Brent has almost halved in the past year because of excess supply
and a 2014 shift in strategy by the Organization of the Petroleum
Exporting Countries to defend market share against higher-cost
supplies, rather than cut output to prop up prices.
There are signs that OPEC's strategy to curb growth in higher-cost
production such as U.S. shale by allowing prices to fall is starting
to deliver, analysts say.
U.S. crude output rose by 94,000 barrels a day in July to 9.358
million bpd, U.S. data showed on Wednesday. Production was 9.612
million bpd in April and declined in May and June.
(Editing by Gopakumar Warrier and Jane Merriman)
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