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West Texas Intermediate rose to the highest levels since April 2011 on concern that a seen as imminent missile attack against the Syrian regime may spill the conflict over the Middle East region, which accounts for a third of global oil output. Brent touched a 6-month high.

On the New York Mercantile Exchange, WTI crude for October delivery traded at $110.50 per barrel at 7:24 GMT, up 1.36% on the day. The American benchmark rose to $112.23 per barrel earlier in the early European session, which was the highest level since April 2011. Futures surged more than 3% on Tuesday and settled at $109.01, the highest closing price February 24. The contract extended its weekly advance to over 3.9% after retreating 1.24% last week.

Meanwhile on the ICE, Brent crude for delivery in October rose to $115.75 per barrel at 7:25 GMT, marking a 1.21% gain. Prices surged to a days high of $117.33 earlier in the day, the strongest level since the middle of February, while days low stood at $114.33 a barrel. The European benchmark jumped 3.8% on Tuesday and settled at $114.36, the highest since February 25. The contract extended its weekly advance to 4.3% after adding 2.6% in the preceding two five-day periods.

Oil prices surged to multi-month highs as the U.S. and its Western nation partners began preparing for an intervention in Syrias civil war, which by many is seen as imminent. The United States, Great Britain and France moved closer to a military attack as they laid justifying legal groundwork for taking action against the Syrian regime which allegedly used chemical weaponry against civilians last week.

Defense Secretary Chuck Hagel told the BBC the U.S. military is “ready to go” if Obama makes the order. “We have moved assets in place to be able to fulfill and comply with whatever option the president wishes to take,” Hagel said yesterday during a trip to Brunei for the BBC. This comes after U.S. Secretary of State John Kerry announced on Monday that there is “undeniable” evidence the Syrian regime led by President Bashar al-Assad used chemical weaponry against civilians in the Damascus suburbs last week. Assad denied responsibility and blamed rebels for staging the attacks.

Investors are mainly concerned that a possible international campaign against Assads regime could spill the conflict over to neighboring Middle East oil producing countries. The region accounts for a third of global oil output.

Michael Wittner, Societe Generales head of oil market research in New York, said for Bloomberg: “The concern is that an attack on Syria will reverberate through the region, increasing the spillover into other countries and possibly resulting in a larger supply disruption elsewhere.” The bank predicted Brent may surge “briefly” to $150 a barrel if tension in Syria spreads to its neighbors.

Meanwhile, Brents relative strength index rose to overbought, above 70, for the first time since February, indicating that further gains might not be sustainable.

Also supportive for the oil market, Libyas deputy oil minister said on Tuesday that the countrys largest western oilfields were closed when an armed group shut down the pipeline linking them to export terminals. According to data compiled by Reuters, Libyas total output has fallen to an eight of its pre-civil war levels in 2011 of 1.6 million bpd, or 200 000 barrels per day.

ANZ analysts said in a note: “While the events in Syria have little impact on oil prices in isolation, the potential impacts flowing through to the rest of the region are high while sectarian violence continues in Iraq and supplies from Nigeria, Libya and Sudan continue to disappoint.”

Inventories data

The industry-funded American Petroleum Institute posted its weekly crude reserves data. According to the report, U.S. crude inventories rose by 2.47 million barrels in the week ended August 23, while gasoline stockpiles dropped by 1.13 million barrels. However, APIs numbers are considered as less reliable than EIAs statistics as they are based on voluntary information provided by operators of pipelines, refineries and bulk terminals.

The Energy Information Administration will post its weekly crude oil data report later today. According to a Bloomberg survey of analysts, crude inventories probably rose by 750 000 barrels last week, while gasoline stockpiles are expected to have fallen by 1.38 million barrels.

Oil prices were also supported recently following downbeat U.S. new homes sales and durable goods orders, which dampened speculations that the Federal Reserve will begin decelerating its Quantitative Easing program in as early as September.

Market players will be keeping a close eye on this week’s U.S. economic data to further gauge Quantitative Easing’s tapering prospects. Wednesday’s Pending Home Sales might have advanced by 0.1%. On Thursday, the Preliminary Revised GDP is likely to have grown by 2.3%, while consumer spending and core consumer spending (Personal Consumption Expenditures) probably surged by 1.8% and 0.8% in the second quarter respectively. Initial Jobless Claims probably fell by 1 000 in the week ending August 24. On Friday, Personal Income and Spending are expected to have advanced in July but at a slower pace than in June. Core PCE on monthly and annual basis likely rose in July and the Chicago PMI and Final University of Michigan Confidence are projected to have advanced in August as well.

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