Oil prices hovered near two-year highs on Thursday, bolstered by geopolitical risks in the Middle East.
Light, sweet crude for December delivery climbed 36 cents, or 0.6%, to $57.17 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 44 cents, or 0.7%, to $63.93 a barrel.
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Escalating geopolitical tensions have put investors on high alert for potential supply disruptions, helping push crude prices to levels not seen since 2015. Traders said the most recent concerns stemmed from news Thursday that the Saudi government ordered its citizens out of Lebanon, signaling the potential for escalating conflict between Saudi Arabia and Iran, another major oil producer.
"The stage is set with everything that's percolating in the Middle East, particularly Saudi Arabia," said Michael Hiley, a trader at LPS Futures LLC. "The unknown of what could happen creates a little bit of fear... in a market that already was going up."
Adding to the uncertainty were media reports that Saudi King Salman plans to relinquish power to his son Crown Prince Mohammed bin Salman. While the reports were unconfirmed and taken with some skepticism among traders, it built on increasing risks priced into the market.
"It's a bit specious, it's not rock solid. But its in the market and that's sort of the worry," said John Kilduff, founding partner at Again Capital.
On Monday, oil prices soared after officials in Saudi Arabia detained more than five dozen princes, ministers and prominent businessmen in a corruption crackdown and effort to consolidate power. Supply risks in other counties such as Iran and Venezuela have also pushed oil prices higher in recent weeks.
"In a matter of weeks, production policy, foreign policy and domestic policy risks have all increased sharply for the oil market," Goldman Sachs analysts wrote in a Thursday note.
The market is also awaiting more information from the Organization of the Petroleum Exporting Countries and its official meeting in Vienna on Nov. 30, during which many industry watchers expect the group to extend a deal to limit production in an attempt to bring global stockpiles back to the five-year average level.
However, increasing U.S. production may present a challenge for OPEC members. Data from the U.S. Energy Information Administration on Wednesday showed that domestic production rose to 9.62 million barrels a day in the week ended Nov. 3, the highest weekly figure on record. Crude stockpiles unexpectedly rose by 2.2 million barrels last week, the EIA reported.
"A decision will be complicated by the debatable state of oil rebalancing and the recent rise in prices above the industry's marginal costs," Goldman Sachs analysts said.
Gasoline futures fell 0.1% to $1.8197 a gallon and diesel futures rose 1.3% to $1.9469 a gallon.
Sarah McFarlane contributed to this article
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(END) Dow Jones Newswires
November 09, 2017 15:57 ET (20:57 GMT)