Oil rises 2 percent on Mideast tensions, US optimism

NEW YORK Mon Nov 19, 2012 11:32pm IST

Signs of Pap Oil gas station are pictured in Prague October 16, 2012. REUTERS/David W Cerny

Signs of Pap Oil gas station are pictured in Prague October 16, 2012.

Credit: Reuters/David W Cerny

Related Topics

NEW YORK (Reuters) - Oil rose more than 2 percent on Monday to its highest price since mid-October, fueled by supply concerns as violence in the Middle East escalated and as investors grew more hopeful that a U.S. budget crisis will be averted.

Traders focused on the growing Israeli-Palestinian conflict. Israel bombed dozens of targets in the Gaza Strip on Monday and said that while it was prepared to step up its offensive by sending in troops, it preferred a diplomatic solution that would end Palestinian rocket fire.

While previous Middle East wars have led to oil embargoes and temporary disruptions to energy supplies, analysts say it is unlikely the confrontation will spill out into a wider conflict in the region, which supplies a third of the world's crude.

United Nations Secretary General Ban Ki-moon was due to arrive in Cairo on Monday to support ceasefire efforts led by Egypt, which borders both Israel and Gaza and whose Islamist-rooted government has been hosting leaders of Hamas.

"There's no oil being lost, obviously. But it's just the follow-on effect. No one likes confrontation anywhere near the Gulf region," said Rob Montefusco, oil broker at Sucden Financial in London.

Brent futures traded up $2.61 to $111.56 by 12:35 a.m. (1535 GMT) after touching a high of $111.72, the highest intraday trade since October 19.

As prices advanced, Brent broke through its 50-day moving average $111.09 a barrel after dropping below that average on October 18. The international benchmark also briefly rose above the 200-day moving average of $111.88 during intraday trade.

U.S. crude oil rose $2.49 to trade at $89.41 a barrel.

Financial markets also found support from expectations that U.S. politicians will avoid a budget crisis, helping support economic recovery in the world's biggest oil consumer.

"There is a little confidence that the chatter that came out last week between the president and congressional leaders might be working toward an agreement," said Gene McGillian, analyst, Tradition Energy in Stamford, Connecticut, noting that U.S. crude also found support after breaking through technical levels at $87.50 a barrel, which it had been testing last week.

(Reporting by Matthew Robinson in New York; Peg Mackey in London and Luke Pachymuthu in Singapore; Editing by David Gregorio)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-WTO Row

REUTERS SHOWCASE

Market Eye

Market Eye

Nifty falls most in nearly 3-1/2 weeks; Sensex down over 400 points  Full Article 

Factory Activity

Factory Activity

Factories post fastest growth for 17 months in July  Full Article 

Paying for Bail

Paying for Bail

Jailed Subrata Roy gets office to negotiate hotel sales.  Full Article 

Rupee Dips

Rupee Dips

Rupee posts biggest weekly loss since record lows in August.  Full Article 

Reviving Infosys

Reviving Infosys

CEO Sikka says to improve business with new growth avenues  Full Article 

Outlook Slashed

Outlook Slashed

ArcelorMittal cuts outlook as ore prices hit mining  Full Article 

Re-gaining Momentum

Re-gaining Momentum

China, Asian factory growth gathers pace; Europe falters  Full Article 

Factory Lockout

Factory Lockout

Pfizer says threats to managers force staff lockout at Mumbai factory .  Full Article 

Gold Smuggling

Gold Smuggling

In cat-and-mouse game, India uncovers new gold smuggling route.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage