NEW YORK (Reuters) - Oil prices hit two-week highs on Tuesday, rising about 3 percent, after a spike in Middle East tensions from Turkey’s downing of a Russian warplane and a rally in U.S. gasoline futures.
Russian President Vladimir Putin called Turkey’s shooting of its fighter jet a “stab in the back” that could have “serious consequences.” Middle East tensions have already been heightened by Russian air raids over Syria to punish those it blamed for the downing of a Russian passenger jet over Egypt last month.
U.S. gasoline futures RBc1 jumped 6 percent on an expected rise in road travel around Thursday’s Thanksgiving holiday.
Gasoline supplies in New York Harbor, the delivery point for gasoline futures, were also tight amid lower imports and the delayed restart of the 70,000 barrels-per-day gasoline-making unit at Irving’s St. John, New Brunswick refinery.
Refining margins for gasoline rose by about $1 a barrel in both the United States and Europe.
Brent LCOc1 settled up $1.29, or 2.9 percent, at $46.12 a barrel, after hitting a two-week high at $46.50.
U.S. crude’s West Texas Intermediate (WTI) futures CLc1 finished the session up $1.12, or 2.7 percent, at $42.87. It hit $43.46 earlier, its highest since Nov. 11.
Some of those gains came off in post-settlement trade after industry group American Petroleum Institute (API) reported a 2.6 million-barrel U.S. crude build for last week, double that expected by analysts in a Reuters poll. [API/S] [EIA/S]
Traders have bet since last week that WTI will fall below the 6-1/2-year low of $37.75 set on August, and that Brent will tumble as well, as worries about a global oil glut resurfaced.
But heightened Middle East tensions now could delay that, some analysts said.
Crude could also see support from speculation that Saudi Arabia was keeping options open for price cooperation with other oil producers at a Dec. 4 OPEC meeting.
“Ultimately, we still see a drop to around $37.75, but such a development is not expected until the market gets through the OPEC meeting at the end of next week and when increasingly bearish global supply balances place additional pressure on the WTI curve,” said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.
Market intelligence firm Genscape reported a 2.2 million-barrel build last week at the Cushing, Oklahoma delivery point for U.S. crude futures.
Analysts will look out Wednesday on whether U.S. government data matches, exceeds or falls short of the nationwide build of 2.6 million barrels reported by API.
Additional reporting by Karolin Schaps in London and Meeyoung Cho in Seoul; Editing by Marguerita Choy and Cynthia Osterman and David Gregorio