NEW YORK: Brent oil rose yesterday, hovering at a two-week high, as conflict in South Sudan threatened the country’s oil output at a time when production cuts in Libya are already curbing global supply.
Amid the uncertainty, traders bought back contracts to cover short positions ahead of the Christmas holiday today, which drove US and European prices up in light holiday trade.
“There’s a rule of thumb; you really don’t want to go home short with what’s going on,” said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
The situation in South Sudan “is going to put a potential crunch on supply in the short term,” he said.
US petrol futures supported oil prices, trading up 1.24 percent, after reaching a 15-week high in the previous session. Refinery snags in the United States and striking refinery workers in France thinned supply while demand remains robust.
New York Mercantile Exchange trading will close an hour early on Tuesday at 1.30pm EST (1830 GMT) for Christmas Eve. By midday, trading in US and Brent oil fell off and prices were virtually unchanged from earlier in the session.
Brent oil rose 43 cents to $111.99 a barrel by 12:03 p.m. EST (1703 GMT), after matching the December 6 high of $112.06. US oil futures edged up 33 cents to $99.24, above the 200-day moving average of $98.89.
US petrol futures reached a 15-week high of $2.8174 per gallon within fractions of a penny of the 200-day moving average of $2.8176. The contract was last trading 1.24 percent higher at $2.8148.
The crack, or difference, between US crude oil futures and gasoline continued to widen after rising to a three-week high in the previous session. It last traded at $19.03 per barrel.
West Texas Intermediate (WTI) crude, the US benchmark, is up about 8 percent for the year, while the gap with Brent widened to almost $20 earlier this year, as more pipelines diverted oil from the contract’s delivery point in Cushing, Oklahoma, reducing a supply glut.
Reuters
