Commodities: Oil up on geopolitical tension

Moscow’s intervention in Syria has strained its relations with Turkey – a fierce opponent of Assad – with Ankara summoning Russia’s ambassador last week after Moscow’s warplanes bombed Syrian territory “very close” to the Turkish border. The incident dented a hole in the hope of betterment in the relationship between Russian Federation and the West which had shown glimpses of strengthening post Paris attack. But, “Russia’s response could have been a lot more confrontational”.

“Commodities have bounced back with oil trading higher with rising geopolitical tensions in the Middle East”, said CMC Markets analyst Jasper Lawler. Traders believe only a continuation of the buying interest would point towards a reversal in the near term. The euro rose to $1.0673 from $1.0654.

Gold rose, recovering from near six-year lows after news of the plane’s downing. Brent crude oil was down 1.2 percent to $45.57 per barrel in early trading.

Brent crude settled down 71 cents at $45.46 a barrel in the previous session, having earlier dropped more than $1 to a session low of $45.00 a barrel.

“You came in this morning and everybody was talking about this potential escalation of violence between Turkey and Russian Federation”, said Andrew Frankel, co-president of Stuart Frankel & Co in NY. Since Turkey is a member of North Atlantic Treaty Organisation, there is the threat in a worst case scenario of a conflict between the Western military alliance and Russian Federation. The dollar index .DXY retreated from an 8-month peak of 100.000 set on Monday. As oil is priced in dollars, it becomes cheaper for holders of other currencies as the greenback weakens.

United States markets were closed on Thursday for the Thanksgiving public holiday. Australian shares dipped 0.1 percent while Japan’s Nikkei shed 0.4 percent. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January CLF6, -1.56% traded at $43.03 a barrel, up $0.16 in the Globex electronic session. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use. The EconoTimes content received through this service is the intellectual property of EconoTimes or its third party suppliers. Neither EconoTimes nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.