WTI at 16-month high on Hagel comments

West Texas Intermediate surged to the highest since February 2012 as senior U.S. officials said missile strikes against Syria could be launched as early as Thursday. Brent hit a 6-month high.

On the New York Mercantile Exchange, WTI crude for October delivery traded at $108.82 per bushel at 13:56 GMT, up 2.74% on the day. The contract rose to $109.06 per barrel, the highest since February 2012, while days low remained at $105.90 a barrel. The contract retreated slightly on Monday, marking a 2.3% advance on the week after declining 1.24% the preceding five-day period.

Meanwhile on the ICE, Brent oil for October delivery stood at $113.42 per barrel at 13:55 GMT, up 2.41% on the day. The European benchmark hit a 6-month high of $113.59 per barrel during late European trading, while days low stood at $110.75 per barrel. The contract fell slightly on Monday but extended its weekly advance to 2.10% a following Tuesdays advance.

Oil prices soared on Tuesday amid escalating tension between the U.S. and the Syrian regime led by President Bashar al-Assad. Senior U.S. officials said military forces are ready to launch missile attacks against Syria on as early as Thursday. Defense Secretary Chuck Hagel told the BBC the U.S. military is “ready to go” if Obama makes the order.

“We have moved assets in place to be able to fulfill and comply with whatever option the president wishes to take,” Hagel said during a trip to Brunei for the BBC. This comes after yesterday U.S. Secretary of State John Kerry said that there is “undeniable” evidence the Syrian regime led by President Bashar al-Assad used chemical weaponry against civilians in the Damascus suburbs last week. Assad denied responsibility and blamed rebels for staging the attacks.

Although Syria is not a major oil producer, market players fear that the geopolitical turmoil might drag neighboring oil producing countries into the conflict, threatening global supplies.

Also supportive for oil, Libyas oil minister said on Tuesday the countrys output has declined by nearly 60% to 6650 000 barrels per day due to protesting armed security guards blocking the nations main ports.

Market players will also be keeping a close watch on this week’s crude oil data. The Energy Information Administration will publish its data at 12:30 GMT on Wednesday. According to a weekly Bloomberg survey of analysts, crude oil inventories should have risen by 700 000 barrels last week, the first gain in four weeks. U.S. gasoline stockpiles probably decreased by 1.25 million barrels, while distillate fuel reserves may have surged by 500 000 barrels. Refineries utilization is projected to have fallen by 0.2%.

The industry-funded American Petroleum Institute will release its report later on Tuesday, but ti is considered as less reliable than EIA’s statistics since it is based on voluntary information from operators of pipelines, refineries and bulk terminals.

Oil prices were also supported recently following downbeat U.S. new homes sales and durable goods orders, which dampened speculations that the Federal Reserve will begin decelerating its Quantitative Easing program in as early as September.

Market players will be keeping a close eye on this week’s U.S. economic data to further gauge Quantitative Easing’s tapering prospects. Wednesday’s Pending Home Sales might have advanced by 0.1%. On Thursday, the Preliminary Revised GDP is likely to have grown by 2.3%, while consumer spending and core consumer spending (Personal Consumption Expenditures) probably surged by 1.8% and 0.8% in the second quarter respectively. Initial Jobless Claims probably fell by 1 000 in the week ending August 24. On Friday, Personal Income and Spending are expected to have advanced in July but at a slower pace than in June. Core PCE on monthly and annual basis likely rose in July and the Chicago PMI and Final University of Michigan Confidence are projected to have advanced in August as well.