Oil tops $97 amid Syria worries, ahead of US data
The price of oil rose past $97 a barrel Friday amid concerns about a possible escalation in Syria's civil war while traders awaited the release of several reports on the U.S. economy.
By early afternoon in Europe, benchmark oil for July delivery was up 36 cents to $97.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 81 cents to close at $96.69 a barrel on Thursday.
President Barack Obama's decision, revealed Thursday, to provide some weapons to rebels fighting the forces of Syrian President Bashar Assad came after the White House said it had convincing evidence that Assad's regime — which has been supported by Russia, Iran and Lebanon's Hezbollah — had used chemical weapons against the opposition.
The Middle East is a key source of crude oil and important transit routes cross the region, so conflicts which threaten disruptions in crude production or supply usually drive oil prices higher.
"One way or another the Syrian conflict is escalating, it is not only morphing into a U.S.-Russia proxy war but also into a U.S.-Iran proxy war and nobody knows how this will terminate as militarily the U.S. in Syria cannot afford to lose against Iran and Hezbollah," said Olivier Jakob of Petromatrix in Switzerland.
Later Friday, the U.S. Federal Reserve will release industrial production data for May. Overall industrial production, which also includes output at utilities and mines, dropped 0.5 percent in April. That's the biggest decline since August. Analysts expect to see a slight improvement of 0.2 percent for May.
The world's biggest economy grew at an annual rate of 2.5 percent in the January-March quarter, buoyed by the fastest rise in consumer spending in more than two years. But economic growth is expected to be weaker in the second quarter.
Other reports being released Friday are those on U.S. wholesale prices and the International Monetary Fund's annual assessment on the health of the U.S. economy.
Meanwhile, Brent crude, a benchmark for many international oil varieties, was up 57 cents to $105.52 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline rose 0.61 cent to $2.8674 a gallon.
— Heating oil added 1.05 cents to $2.95 per gallon.
— Natural gas advanced 1.2 cents to $3.826 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.