Oil Prices Up Amid Rising Tensions After Paris Attacks

Internationally traded Brent was at $44.98 a barrel, up over a percentage point and half a dollar, testing resistance at $45 per barrel.

“Strikes against the Islamic State could worsen the geopolitical tensions in the oil-producing Middle East region and this supports crude prices”, said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services organization EY.

West Texas Intermediate for December delivery, which expires Friday, fell 68 cents, or 1.7 percent, to $40.07 a barrel at 9:21 a.m. on the New York Mercantile Exchange.

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A rise in USA oil stockpiles seen in recent weeks is unlikely to change this week due to the continuing refinery maintenance season.

Rising U.S. stockpiles served as the most visible evidence of oversupply in oil markets.

US crude futures slipped by 72 cents to $41.02 a barrel.

Morgan Stanley said it sees an average crude oil oversupply of only 700,000 to 1 million barrels per day (bpd) for 2015, not the 1.5 million to 2.5 million bpd figures often cited.

Traders are preparing for another downward turn in prices by March 2016, market data suggests, as what is expected to be an unusually warm winter dents demand just as Iran’s resurgent crude exports hit global markets after sanctions end.

A narrower spread between the two tends to encourage a greater flow of oil from overseas into the US market, as crude grades pegged to the pricier Brent become more affordable. The December contract expired Friday after falling 1 per cent to US$43.61.

Energy sector analysts also feel that the crude oil market is now over-supplied and the Paris attacks will not have a significant effect on oil prices as Syria has anyway remained unstable for a very long time.

Today at 15:30 (GMT) will be published data which may determine the future path of crude oil. Most analysts, though, say they believe Saudi Arabia will not back down.

In its World Energy Outlook released last week, IEA said that an extended period of lower oil prices would benefit consumers but would trigger energy-security concerns by heightening reliance on a small number of low-cost producers, or risk a sharp rebound in price if investment falls short. “On the other hand, the attacks could weigh on consumer and business confidence in the coming months, which would weigh on growth and therefore oil consumption”.