Oil rose to over $76 a barrel on Thursday on rising tensions between Syria and Israel and a drop in US gasoline and crude inventories. US crude settled up 57 cents to $76.30 a barrel after profit-taking erased an earlier rise up to $77.43, near the all time high of $78.77 a barrel struck on August 1. London Brent crude settled 43 cents higher at $74.77.
The market grew more jittery about supply from the Middle East, the source of nearly a third of world oil, after Syria accused Israel of bombing its territory on Thursday and warned it could respond. The tensions added to worries about supplies in top consumer the United States. Government data showed US crude stockpiles fell 3.9 million barrels in the week to August 31, exceeding forecasts for a 500,000 barrel drop. The drop came as refiners cranked up processing rates, although gasoline inventories still sank 1.5 million barrels to the lowest level in two years.
"The sizeable drop in crude stocks shows that the tightness in global inventories is now spreading to the US, which has long maintained higher stocks than the rest of the OECD nations," said Antoine Halff of Fimat Research. A string of unplanned outages in the ageing US refining system has created tightness in the gasoline market this summer and inventories have been steadily drawn down.
Further support came after the US embassy in Nigeria warned US and other Western interests in the African oil producing nation are at risk of "terrorist attack".
The official warning, in a message for US citizens in Nigeria, gave few details but said potential targets include official and commercial installations in the capital Abuja and the commercial city of Lagos.
Supply concerns were heightened by expectations the Organisation of the Petroleum Exporting Countries will maintain output curbs when it meets on September 11 in Vienna. Opec officials have said oil's push to near record highs was due to a shortage of refined products and boosting output would only add to what they call comfortable stock levels.
"I think the market is very well balanced," Opec President Mohammed al-Hamli, also oil minister of the United Arab Emirates, told Reuters on Thursday. "There is no shortage whatsoever of oil supplies."
Some analysts see stronger demand in the fourth quarter, causing a supply crunch unless Opec raises output. An Opec source told Reuters the group may have to raise output by up to 1 million barrels per day (bpd) later this year. Opec production in August was just over 30 million bpd, according to a Reuters survey. Traders were also keeping an eye on the storm season in the Gulf of Mexico, with the Colorado State University forecasting more storms ahead.
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