* White House says evidence of poison gas "undeniable"
* U.S. durable goods orders drop most in nearly a year
* North Sea, Libyan outages supporting market
(New througout, updates prices and market activity to
By Jeanine Prezioso and David Sheppard
NEW YORK, Aug 26 Brent crude oil prices hit a
five-month high above $111 a barrel on Monday as the United
States signalled it was edging toward a possible military
response to last week's suspected chemical attack in Syria, but
prices settled slighty lower in choppy trade as weak U.S.
economic data weighed.
In the most forceful U.S. reaction yet since Wednesday's
suspected chemical attack, Secretary of State John Kerry accused
the Syrian government of an attempted cover up and said
President Barack Obama "believes there must be accountability
for those who would use the world's most heinous weapons against
the world's most vulnerable people."
Oil analysts at Barclays said the growing likelihood of some
form of U.S.-led military response raised tensions in the Middle
East "compounding concerns about the stability of the world's
key oil producing region and will likely exert upward pressure
Brent crude oil futures for October delivery traded
up to $111.68 a barrel, the highest since April 2, before
slipping to end the day 31 cents lower at $110.73 a barrel.
After the settlement, prices edged up again to around
$111.10 a barrel after the White House said it was "undeniable"
that chemical weapons were used in Syria.
U.S. crude for October delivery ended 50 cents lower
at $105.92, after trading as high as $107.37, the most in four
Trading in both benchmark contracts was less than half the
30-day average, with a public holiday in London cutting volume.
Kerry spoke after a team of United Nations chemical weapons
inspectors visited the site of the alleged poison gas attack in
Syria, and as military chiefs from the United States and its
European and Middle Eastern allies met in Jordan.
Unrest in the Middle East, which pumps a third of the
world's oil, has supported Brent crude. Hedge funds and other
large speculators raised their bets on higher Brent prices to a
record level in the week to Aug. 20, exchange data shows, while
positioning for gains in U.S. crude is also at elevated levels.
"The fear that the situation in the Middle East could spiral
out of control is keeping sellers from coming out of woodwork,"
said Gene McGillian, an analyst with Tradition Energy in
US DATA CAPS GAINS
Tighter supplies due to output disruptions in the North Sea
and Libya and positive economic data from the euro zone and
China last week also supported prices. Since late June, Brent is
up by about $12 a barrel.
Trading has been choppy in the past two weeks, as investors
weigh how each piece of economic data will influence the U.S.
Federal Reserve decision of whether and when to scale back its
On Monday, a sharp drop in U.S. durable goods orders added to
signs that economic growth in the world's largest oil consumer
may be slower than previously expected in the third quarter,
after government figures late last week showed new home sales
dropped to their lowest in nine months.
"We're seeing the poor news on home sales Friday and durable
goods today," said Bill Baruch, senior market strategist at
iitrader.com in Chicago. "It's kept the market in check after
the recovery in the last week."
At the same time, weaker data may convince the Fed to hold
off on trimming its economic stimulus program, which has largely
been seen as supporting commodity prices.
U.S. crude prices rose to a two-week high of $108.17 on Aug.
16, but shed one percent last week.
Brent's premium to the U.S. benchmark West Texas
Intermediate CL-LCO1=R briefly narrowed to $4.02 per barrel,
its smallest since Aug. 20. It settled at $4.81.
U.S. gasoline futures were off the three-week high
they hit on Friday. They settled at $2.9517 a gallon, close to 2
The gasoline-making unit at Monroe Energy's 185,000
barrel-per-day Trainer refinery was restarting on Monday,
industry intelligence group Genscape said. That should add to
supplies on the heavily populated East Coast during the summer
U.S. commercial crude and gasoline stockpiles are forecast
to have fallen last week due to stronger summer demand, a
preliminary Reuters poll of five analysts showed on Monday.
(Additional reporting by Julia Payne in London and Florence Tan
in Singapore. Editing by Andre Grenon and David Gregorio)