Oil retreats from 2-year high, falls below $110
The price of oil fell to near $109 a barrel Thursday, easing off a two-year high, after official figures showed a rise in U.S. crude inventories.
By early afternoon in Europe, benchmark oil for October delivery was down 65 cents to $109.45 a barrel in electronic trading on the New York Mercantile Exchange.
The contract rose $1.09, or 1 percent, to $110.10 a barrel on Wednesday, driven higher by the prospect of Western military intervention in Syria’s civil war. That was its highest closing price since May 3, 2011. Earlier in the day, oil charged as high as $112.24.
The Energy Department’s Energy Information Administration said crude stocks for the week ended Aug. 23 rose by 3 million barrels to 362.1 million barrels. In contrast, analysts had been expecting a slight fall in crude stockpiles. Rising supplies tend to hold oil prices down.
Still, JBC Energy said current developments, such as low spare capacity in Saudi Arabia and signs of an improving global economy, pointed to tighter markets.
The oil price has surged 27 percent since touching a low for the year of $86.68 on April 17. Recently, it has been propelled higher by political unrest in Egypt and the threat of U.S. intervention in Syria’s civil war. Neither country is a major oil exporter, but traders are concerned that the violence could spread to more important oil-exporting countries or disrupt major oil transport routes.
Despite the higher geopolitical risks, analysts at Commerzbank in Frankfurt dismissed recent predictions that oil prices could rise to $150 a barrel as “unfounded scaremongering.”
“The present situation simply does not warrant such a price,” Commerzbank said. “Were the West to launch only a limited military strike against the Syrian regime, it is likely that oil prices would then fall again just as quickly again as they increased.”
Oil prices were also under pressure from a stronger dollar, which makes crude priced in dollars more expensive and a less attractive investment for traders using other currencies. On Thursday the euro was down to $1.3255 from $1.3340 late Wednesday in New York.
Markets were also looking forward to the release later Thursday of the Commerce Department’ second estimate of how fast the U.S. economy grew in the April-June quarter and the Labor Department’s report on the number of Americans who applied for unemployment benefits last week.
Brent crude, the benchmark for international crudes, fell 92 cents to $115.69 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Heating oil lost 1.75 cents to $3.1938 per gallon.
— Natural gas rose 0.1 cent to $3.583 per 1,000 cubic feet.
— Wholesale gasoline fell 2.51 cents to $2.9365 per gallon.
Pamela Sampson in Bangkok contributed to this report.