| Oil prices rise to 7-week high on ME tensions |
LONDON World oil prices hit seven-week highs on Thursday as traders fretted over the impact of simmering geopolitical tensions in the crude-rich Middle East even as European shares soared to a four-month high as another string of estimate-beating corporate results surprised investors who had braced for a weak show.
Brent North Sea oil for delivery in September jumped to $107.48 per barrel and New York’s light sweet crude for August struck $91.86, matching highs last seen in late May.
“Prices have climbed ... primarily on the back of geopolitical risks,” said Commerzbank analyst Carsten Fritsch.
“The conflict in Syria, which has already been underway for 16 months, appears to be escalating.
“The Iran conflict is also coming into increasingly sharp focus, Israel having blamed Iran for the attack on Israeli tourists in Bulgaria.”
In late afternoon deals, Brent stood at $107.16, up $2 from Wednesday’s closing level, while New York was $1.91 higher at $91.78.
Handset maker Nokia, short interest in which had reached record level ahead of results, surged 12 per cent to top the European leaderboard after reporting a smaller-than-expected quarterly loss.
French industrial connglomerate Alstom, Biotech company Actelion, home appliances maker Electrolux and AkzoNobel all reported strong results.
The FTSEurofirst 300 index provisionally closed up 1 percent at 1,063.73 points.
“It looks like it has been a decent start but overall I suspect the season will be a miss (due to) the deterioration in the macroeconomic environment over the past two or three months,” Daniel McCormack, a strategist with Macquarie, said.
“The rally we’ve had since June 4 has been driven by defensives and I think that reflects lack of conviction on the part of investors.”
Oil prices had risen on Wednesday, driven also by news of worsening violence in Syria.
Oil won more support from strong US company results and housing data, and Federal Reserve Chairman Ben Bernanke’s comments that the US central bank remained ready to act to help the weak American economy.
“Oil was in focus not only because of the Fed chairman’s comments but also due to rising geopolitical tensions,” said PVM Oil Associates analyst Tamas Varga.
“Syrian oil production capacity is only around 400,000 barrels per day but when a suicide bomber kills a minister who was a close ally of the ruler of the country, it is inevitable that oil prices go up.”
Agencies
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