Global Oil Prices Rise on Middle East Tensions

Reuters

Oil prices hit two-week highs on Tuesday, rising about 3 percent, after a spike in Middle East tensions from Turkey's downing of a Russian warplane and a rally in U.S. gasoline futures.

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Russian President Vladimir Putin called Turkey's shooting of its fighter jet a "stab in the back" that could have "serious consequences." Middle East tensions have already been heightened by Russian air raids over Syria to punish those it blamed for the downing of a Russian passenger jet over Egypt last month.

U.S. gasoline futures jumped 6 percent on an expected rise in road travel around Thursday's Thanksgiving holiday.

Gasoline supplies in New York Harbor, the delivery point for gasoline futures, were also tight amid lower imports and the delayed restart of the 70,000 barrels-per-day gasoline-making unit at Irving's St. John, New Brunswick refinery.

Refining margins for gasoline rose by about $1 a barrel in both the United States and Europe.

Brent settled up $1.29, or 2.9 percent, at $46.12 a barrel, after hitting a two-week high at $46.50.

U.S. crude's West Texas Intermediate (WTI) futures finished the session up $1.12, or 2.7 percent, at $42.87. It hit $43.46 earlier, its highest since Nov. 11.

Traders have been betting WTI will fall below the 6-1/2-year low of $37.75 set on Aug. 27, and Brent will tumble too.

Heightened geopolitical tensions across the Middle East could delay that, some analysts said.

Crude could also see support from speculation that Saudi Arabia was keeping options open for price cooperation with other oil producers at a Dec. 4 OPEC meeting.

"Ultimately, we still see a drop to around $37.75, but such a development is not expected until the market gets through the OPEC meeting at the end of next week and when increasingly bearish global supply balances places additional pressure on the WTI curve," said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.

Market intelligence firm Genscape reported a 2.2 million-barrel build last week in storage at the Cushing, Oklahoma delivery point for U.S. crude futures.

Analysts in a Reuters poll forecast that U.S. crude stockpiles as a whole rose for a ninth straight week last week.

Industry group American Petroleum Institute will issue a preliminary inventory report at 4:30 p.m. EST (2130 GMT), before official data on Wednesday morning.