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Oil rises above $88 despite ample US oil stocks

  • Article by: PAMELA SAMPSON
  • Associated Press
  • December 6, 2012 - 4:08 AM

BANGKOK - Oil prices rose Thursday despite disappointing retail sales figures in Europe and ample seasonal U.S. crude stocks as Syria's civil conflict moved to the forefront.

Benchmark crude for January delivery was up 17 cents to $88.05 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 62 cents to finish at $87.88 per barrel on the Nymex on Wednesday.

Brent crude, which is used to price international varieties of oil, rose 31 cents to $109.11 per barrel on the ICE Futures exchange in London.

Analysts said concerns that Syria might be readying chemical weapons for use against rebels trying to overthrow the regime of President Bashar Assad could see Brent prices swing higher.

"We could see Brent crude trading higher if Syria and the West move into a dangerous negotiation period — Syria knowing very well the repercussions of it actually using the weapons but the West equally uneasy about the prospect that the regime is desperate and might miscalculate," said Peter Esho, chief market analyst at City Index Group in Sydney.

On Thursday, Germany's Cabinet approved the dispatch of German Patriot air defense missiles to protect Turkey against possible attacks from Syria, a sign that tensions in the region were far from easing. It was also a major step toward a potential Western military role in the Syrian conflict.

Meanwhile, retail sales across the 17 European Union countries that use the euro fell 1.2 percent in October, double September's decline, EU statistics showed Wednesday. The figures provide further evidence that households remain gloomy over the economy and are reluctant to spend. Analysts at CME Group said the retail figures were weaker than expected.

U.S. oil inventories are well above average for this time of year, according to the Energy Information Agency, even though supplies fell 2.4 million barrels last week, more than the 1.25 million barrel decline expected by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Separately, the American Petroleum Institute said oil supplies dropped 2.2 million barrels for the week ending Nov. 30.

In a commodities report, Goldman Sachs forecast the average price for benchmark crude in 2013 at $105.50 per barrel and at $99 per barrel in 2014.

In other energy futures trading on the Nymex:

_ Heating oil rose 1.1 cent to $3.00 a gallon.

_ Natural gas fell 0.9 cent to $3.691 per 1,000 cubic feet.

_ Wholesale gasoline rose 1.4 cents to $2.652 a gallon.

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