Brent crude oil above $97 as US launches strikes in Syria

2014-09-24 15:18:13

Brent crude rose above $97 a barrel on Tuesday as the United States and several Gulf Arab allies launched strikes against Islamic State strongholds in Syria, and as a surprise pick-up in China's factory activity boosted the demand outlook, according to The Economic Times.

Oil prices fell to a two-year low last week under the weight of a supply glut and tepid demand, but prices have stabilised as pockets of strength in the world economy have emerged and as tensions have risen in the Middle East.

In China the manufacturing sector unexpectedly picked up some momentum in September even as factory employment slumped to a 5-1/2-year low, with the HSBC/Markit Purchasing Managers' Index (PMI) rising to 50.5 in September from 50.2 in August.

Brent for November delivery was up 28 cents at $97.25 a barrel by 0817 GMT, after falling by more than a dollar on Monday. It hit a two-year low of $96.21 last week.

US crude rose 31 cents to $91.18 a barrel, rebounding from a session low of $90.58 that was its weakest since Sept. 11.

The better-than-expected China PMI fuelled the recovery in prices, said Avtar Sandu, senior manager for commodities at Phillip Futures.

"The market was really oversold earlier and there was not much room for prices to go further down," Sandu said.

The US military said air and missile strikes against Islamic State were designed to disrupt "imminent attack" against the U.S. and Western interests by "seasoned al Qaeda veterans" who had established a safe haven in Syria.

They were carried out with the support of Jordan, Bahrain, Saudi Arabia, Qatar and the United Arab Emirates, the US said.

At the same time Syria said Israel had shot down a warplane over the Golan Heights, confirming the first such incident in three decades.

Keeping oil price gains in check are persistent concerns over a well-supplied market that had pushed Brent down by more than 5 per cent so far in September, with the oil benchmark on track for a third straight monthly fall.

But Saudi Oil Minister Ali al-Naimi on Monday downplayed worries about the impact of sinking crude oil prices, which had fuelled recent speculation that the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil output.

His views were echoed by United Arab Emirates oil minister Suhail bin Mohammed al-Mazroui on Tuesday who said it was premature to decide whether OPEC should lower output policy ahead of its November 27 meeting.