Brent crude oil rose above $109 per barrel on Thursday as escalating tensions between Syria and Turkey raised more concerns over the security of oil supplies from the Middle East.
Turkey's military hit targets inside Syria for the second day on Thursday after a mortar bomb fired from Syrian territory killed five Turkish civilians, marking the most serious cross-border escalation of the 18-month-old uprising in Syria.
Continue Reading Below
Turkey's government said "aggressive action" against its territory by Syria's military had become a serious threat to its national security and sought parliamentary approval for the deployment of Turkish troops beyond its borders.
Traders said the violence raised concerns about the stability of the whole of the Middle East at a time when Iran is at loggerheads with Israel and the West over its nuclear programme and both sides have threatened military action.
Brent crude for November rose to a high of $109.61, up $1.44, before returning to trading levels of around $109.50 by 1130 GMT. The contract fell to an intra-day floor of $107.67 on Wednesday, the lowest since Sept. 20.
U.S. light crude oil for November rose 70 cents to $88.84 a barrel, after dropping to its lowest since Aug. 3 in the previous session.
"The hostilities between Syria and Turkey reinforce supply fears, as a number of pipelines cross the region," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
"We therefore envisage prices recovering provided that the general market environment does not deteriorate."
On Wednesday, Brent dropped 3 percent and U.S. crude fell 4 percent as fears a delayed recovery in China and recession in the euro zone would limit energy demand, but futures began to recover during Thursday's session.
"It (the market) was oversold and then ratcheted up by tensions between Turkey and Syria," said Christopher Bellew, a broker at Jefferies Bache. "It was quite a steep fall, so it could go back up to levels we saw two days ago."
The skirmishes between Turkey and Syria added to worries that oil supplies from the Middle East, a major energy exporter, could be disrupted if tensions escalate.
The dispute over Iran's nuclear programme has triggered tough sanctions from the United States and the European Union and plunged the Iranian rial to a record low this week.
Adding to the tensions is social unrest in Iran over the weakening currency, another blow to citizens already reeling under the impact of the sanctions.
The euro rose to a two-week high against the yen, gold gained for a fourth day and copper rallied.
Stock markets and the euro rallied ahead of U.S. jobs figures on Friday that were expected to show the world's biggest economy recovering slowly. Jobs numbers from the U.S. Labor Department are expected to show a slight improvement from the previous month.
Employers are expected to have added 113,000 jobs to their payrolls, an increase from 96,000 in August, with the unemployment rate edging up by a tenth of a percentage point to 8.2 percent, according to a Reuters survey.
Economic worries remain at the forefront of all asset markets this week as a series of surveys across the world pointed to increasing weakness, casting doubts over the still-fragile recovery of the global economy and oil demand.