OIL PARES GAINS AFTER SHARP RALLY AS SYRIA ROILS MARKET

OIL PARES GAINS AFTER SHARP RALLY AS SYRIA ROILS MARKET

NEW YORK, Aug 28 (Reuters) – Crude oil on both sides of the Atlantic pared gains on Wednesday as traders took profits after a two-day price spike that sent Brent prices up 6 percent and U.S. oil prices up 7 percent.

The threat of Western countries entering the Syrian conflict stirred concerns over oil supply security in the Middle East, which pumps a third of the world’s oil.

That pushed U.S. crude oil futures close to a 2-1/2-year high, heading for their biggest weekly percentage gain in close to two months. Brent prices surged to a six-month high.

After the bout of profit-taking, oil nudged up again during trading hours in New York after U.S. government data showed another drop at a key U.S. storage hub, and that oil stocks were below their levels of a year earlier. EIA/S

The United States and its allies are readying for possible air strikes against the forces of Syrian President Bashar al-Assad, blamed for poison gas attacks last week. But the timing of any action was unclear. (Full Story)

The United Nations Secretary General Ban Ki-moon said its inspectors needed four days to conclude their investigation into whether Syria used chemical weapons. (Full Story)

A prolonged outage at several Libyan oilfields also underpinned prices. (Full Story)

“Syria’s the key driver in this market,” said Andy Lebow, vice president at Jefferies Bache in New York. “It was priced in, and now the market is taking profit off the top. The supply cut-off is coming from Libya, not yet from the Persian Gulf region.”

Traders sold contracts and took profits as the market weighed the “probabilities of a supply cut-off,” he said.

Brent crude oil futures for October delivery  LCOc1 were trading $1.15 per barrel higher at $115.51 at 12:07 p.m. EDT (1607 GMT), after earlier reaching a six-month high of $117.34.

Front-month U.S. crude oil futures  CLc1 were last trading $1.04 per barrel higher at $110.05 after rising as high as $112.24 – its highest since May 2011.

French bank Societe Generale said Brent could spike to $150 if the conflict in Syria spreads and disrupts supply in the region, and possibly reach $125 in the coming days, either in anticipation of an attack or in reaction to the start of an attack.

U.S. OIL DATA

U.S. government data showed crude oil stocks at the key Cushing, Oklahoma, U.S. storage hub fell for the eighth straight week. (Full Story) Total U.S. crude oil stocks rose by 3 million bpd to 362 million bpd, still 2.5 million bpd below the level of a year ago. EIA/S (Full Story) (Full Story)

Earlier in the day, Genscape reported that a train carrying crude oil arrived at Hawthorn Oil Transportation’s Stroud, Oklahoma, terminal, which could signal more supply will be delivered to the Cushing hub via the Hawthorn pipeline. (Full Story)

The premium of Brent oil to U.S. benchmark West Texas Intermediate  CL-LCO1=R was last trading at $5.45 per barrel, after widening to as much as $5.97 earlier in the session.

Irving Oil restarted the 70,000 barrel per day (bpd)gasoline-making unit at its 300,000 bpd refinery in Saint John, New Brunswick, in Canada, a Genscape report said. (Full Story)

U.S. gasoline futures prices  RBc1 seemed to show little reaction to increased supply. They were last trading 1.63 percent higher. or around 5 cents, to $3.0836 a gallon.