12 October 2012, Sweetcrude, LONDON – THE North Sea Brent crude oil reached its highest level in a month on Thursday, driven by rising tension between Syria and Turkey as well as maintenance activities in the North Sea and a supply crunch in oil products.
November Brent crude rose $1.00 to $115.33 a barrel by 1346 GMT, after matching Wednesday’s high of $115.59. US crude climbed 93 cents to $92.18.
Turkey scrambled fighters and briefly detained a Syrian passenger plane on Wednesday, suspecting it of carrying military equipment from Moscow, while Turkey’s military chief warned of a more forceful response if shelling continued to spill over the border.
“The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region,” said Bjarne Schieldrop, analyst at SEB in Oslo.
Worries about supply disruption caused by fears of violence in the Middle East and maintenance at the North Sea Forties oil field have pushed Brent’s premium to US crude to its highest in a year at around $23.50.
North Sea crude oil output from 12 production streams is set to fall by about 1% in November, according to Reuters’ calculations, another potential source of support for Brent oil prices.
Firmer refining margins and steep backwardation in the gasoil market, where prices are higher for prompt delivery than for later dates, pointed to firm demand going into the northern hemisphere winter.
“At current prices, the upcoming winter will be the most expensive winter ever for the consumers using heating oil,” said Olivier Jakob at Petromatrix in Switzerland, adding that gasoline prices were also high.
“All in all, after the high cost of driving and heating there will be at least one iPad less under the Christmas tree,” he said.
Forecasts of slower economic and fuel demand growth kept oil prices from rising further.