Oil prices spike on Syria, Chinese growth
Crude oil prices up more than 2.5 percent to start first trading day of October.
By Daniel J. Graeber
NEW YORK, Oct. 1 (UPI) -- Positive economic data from China and renewed tensions over the conflict in Syria added positive pressure to crude oil prices at the start of Thursday trading.
West Texas Intermediate, the U.S. benchmark for crude oil prices, rallied more than 3 percent above the previous close to hit $46.58 per barrel at the opening bell in New York. Brent crude oil rose 2.5 percent to $49.54 per barrel.
Crude oil prices have see-sawed on mixed economic data from major economies. The U.S. labor market continues to show signs of strength, though Europe still struggles to emerge from recession while Asian economies, notably China, show signs of a slowdown.
While still below a level indicating expansion, the Chinese manufacturing Purchasing Manager's Index of 49.8 was up a fraction of a percent from August, showing some indication the Chinese contraction may be slowing.
Beijing this year devalued the nation's currency, adjusted key interest rates and injected cash into the market in an effort to arrest the decline. The official Xinhua News Agency reports lending authorities this week cut the minimum down payment for first-time home buyers.
Geopolitical factors tied to lingering turmoil in Syria added risk to prices. Russian military forces started air campaigns in support of forces loyal to Syrian President Bashar Assad, while the United States continues to support rebel groups and combat the rise of the group calling itself the Islamic State.
White House spokesman Josh Earnest suggested in his Wednesday press conference Russia was responding from a position of weakness brought on the dual economic strains of lower crude oil prices and tighter sanctions.
"They are seeing the client state that they have maintained inside of Syria progress over the course of five years from being a relatively stable state where they could exercise significant influence to a country that's torn apart by chaos and that risks the status of the leader that they have supported there for years," he said. "That is what has prompted Russia to ramp up their involvement there."
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I have two Internet feeds for O&G related articles/reports. It is common to see terms such as "spike" and "surge" used in headlines. Commodities are stuck in a narrow range, WTI $45 to $50, and have been for some time. Energy reporters/bloggers have to turn out copy and get clicks. To do so over exaggeration in both price directions are regularly employed. It is also common on those two feeds to see both types of articles. For example, there is one today from a leading and respected financial firm predicting crude to fall to $20. Along with some that give the impression of a meaningful increase in price.
IMO there is nothing going on in Syria to support a meaningful increase in the price of oil. Even in some worst case scenario. Now if it was the Strait of Hormuz, that would be a major development. Syria, not so much.
Syria is the land where the biggest gas fields world wide were discovered a mere decade ago, this is why Putin cant let Assad fall. they made the deal. if Assad falls Russia looses dominion over EU through gas sales.
Good post Franks. Interesting........ That makes a lot of sense. It looks like Putin is surrounding the EU.
In the mean time. The price of oil is up-up-and-away. It looks like I missed to low point by $8.00. The question now is when will we hit $65.00 oil and will it stay at that or higher in the future? Any guesses?
I think you should check your sources. Syria does not have "the biggest gas fields in the world". The IEA doesn't even list them as an exporting country. They produce very little natural gas and use it all domestically.
From the EnPatrick article: "This is because it is at the heart of the most colossal gas reserve in the world that Syria is being targeted."
Carnegie article mentions Syria's: "Chinese-owned wells".
If you're right, seems to infer that Russia & China may own and/or hold interest in protecting their own assets (RI)?
You're welcome, Franks. The first article is a good reminder that what you find on the Internet isn't necessarily accurate and should be fact checked.
The second article is referencing only the natural gas production in Syria which is so small it is all consumed domestically. For Syria it is a big deal, for the rest of the world? No.
".....depriving the regime of 45 percent of its gas and electricity resources, according to Syrian opposition estimates."
"........some of Jabal Shaer, part of an area containing massive gas fields said to produce 3 million cubic meters (106 million cubic feet) of raw natural gas (also known as crude gas) per day. This is compared to an estimated total national daily output of some 14.8 million cubic meters in 2014 according to Syria’s Ministry of Petroleum and Mineral Resources."
3MMCMD = ~106 MMCFD. Question: How "massive" is 106 MMCFD in comparison to average current Haynesville Shale wells (a metric that is understood by a lot of GHS members)? Multiple choice: 3, 7, 10.
Although the amount of gas stated may be considered "massive" in relation to the total Syrian production (3.0 MMCFD divided by 14.8 MMCFD, or just over 20%). It is not "the land where the biggest gas fields world wide [sic] were discovered a mere decade ago,".
Thanks again Skip.
More confusion here:
Syrian Rebels Now Begging for Anti-Aircraft Missiles
You're welcome. I stick to energy related topics. There is a group for those who wish to discuss politics.
Fox News: Oct 8th (today)
Huge Oil Reserves Found Near Syrian Border (Israel & Syria Disputed Land) = War?
As Jay pointed out in his previous reply, these are not massive when compared to major natural gas fields worldwide. When you read articles written by reporters with no background in energy, this is what you get. Over exaggeration. It is a good turn of events for the Israelis. Every country values domestic energy security. However it is far from the kind of discovery that would have anything to do with war or Russia or China.
I agree Skip, but Radical Islam wont see it that way.