You are here
Crude prices gain after IS oil operations targeted
[NEW YORK] Crude prices pushed higher on Monday after US-led coalition jets targeted the Islamic State group's oil operations in retaliation following the deadly attacks on Paris.
The gains were not whole-hearted; early weakness in the market came after Japan, a major importer, reported a second straight quarter of economic contraction.
At the end of trade, US benchmark West Texas Intermediate (WTI) for delivery in December added US$1.00 at US$41.74 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for January rose nine cents to US$44.56 a barrel in London deals.
The gain reversed a steady decline since November 5, mostly driven by signs that major producers were not cutting back, and by mounting stockpiles especially in the United States, in part due to the very mild fall weather.
Friday's devastating attacks on Paris, blamed on the Islamic State group, stirred expectations of a rise in the level of conflict in the Syria-Iraq region that some fear could disrupt oil output.
"The market has been flip-flopping back and forth about the concerns over oversupply and the damage to demand," said Phil Flynn of Price Futures Group.
"There have been reports that the US is now targeting ISIS (Islamic State) oil tankers, oil facilities, and that definitely is giving the market a little bit of a boost," he said.
But Phillip Futures analyst Daniel Ang said: "Price increases fueled by geopolitical tensions will only be for the short term." "For the longer term, the main driver for prices will be global supply and demand, and with the glut it would be a bit more difficult for prices to move up a lot further," he told AFP.
Mr Ang said Monday's uptick was also underpinned by bargain hunting after prices dropped to two-month lows Friday.
In early Monday trade, WTI sank sharply for a short period to test the US$40 line, but buyers jumped in and reversed the trend.
Oil prices have plunged by more than half since reaching peaks of above US$100 a barrel in mid-2014 owing to the supply glut and a slowdown in the global economy, particularly major energy user China.