Oil Prices Drift Higher; Jobs, Syria in Focus


Global oil prices edged firmer above $115 a barrel on Friday, with investors looking to expected U.S. jobs data that could move the Federal Reserve closer to unwinding a massive stimulus programme that has boosted commodities.

Concern that a potential U.S. strike on Syria would spread unrest and further disrupt Middle East supplies had boosted oil prices in recent weeks and benchmark Brent crude oil is heading for a fourth straight weekly rise.

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Gains have been limited, however, as U.S. President Barack Obama comes under growing pressure from other leaders not to order a military strike on Syria due to fears that it would hurt the global economy and push up oil prices.

October Brent rose 22 cents to $115.48 a barrel by 0948 GMT. U.S. WTI crude oil for October delivery rose 34 cents to $108.71.

"The moment of reckoning is quickly approaching as the announcement of a change in monetary policy by the Federal Reserve gets increasingly close as the release of strong data turns into a glut," PVM analysts wrote in their fundamentals report.

"It is widely believed that today's jobs report could provide the necessary trigger and seal the deal for stimulus tapering to begin later this month."

Oil could face downward pressure as expectations grow that the Fed will soon start rolling back its stimulus programme, tightening liquidity in global markets and strengthening the dollar.

A strong dollar may depress oil as dollar-priced commodities become less affordable to holders of other currencies.

Solid U.S. jobs and service sector data on Thursday bolstered views the Fed could start slowing its bond-buying programme as soon as this month, but plunging orders for factory goods highlighted uncertainty around the economic outlook.

The U.S. non-farm payrolls report for August is due at 1230 GMT.


Receding expectations of an imminent U.S. strike on Syria and a fall in crude stockpiles at WTI's delivery point in Cushing, Oklahoma, have seen the spread between Brent and WTI narrow to $6.76.

In less than two months, Brent's premium over U.S. crude had swung from parity to as wide as $9, a level not seen since early June, due to concern about Middle East supply disruptions.

Syria is not a major oil producer but concerns had mounted that an escalation in the conflict there could suck big exporters such as Iran or disrupt shipping routes.

"I don't think Brent will do much today. The G20 seems deadlocked over Syria. This U.S. vote next week could go either way so everyone is waiting," Michael Hewson, analyst at CMC Markets, said.

"There won't be too much volatility ahead of the non-farm payrolls data later today but even there I don't think we'll see major moves unless there is a big miss."

U.S. Congress will vote next week on Obama's proposal to launch a missile strike to punish President Bashar al-Assad for his suspected use of chemical weapons against civilians, but scores of lawmakers remain undecided.

At the G20 summit in St Petersburg, Obama has faced growing pressure from Russia, China, the European Union and major emerging market countries not to carry out a strike without support from the U.N. Security Council. (Additional reporting by Florence Tan, editing by William Hardy)