Oil Futures Close at Highest Level in 28 Months

Oil futures settled higher on Friday as traders took in a weaker-than-expected jobs report and as the conflict over Syria intensified, lifting prices back above $110 a barrel to their highest close in 28 months.

Oil for October delivery advanced $2.16, or 2%, to settle at $110.53 a barrel on the New York Mercantile Exchange after touching a high at $110.70. Prices closed 2.7% higher for the week.

Friday’s settlement was the highest for a front-month contract since May 3, 2011. Prices had more recently topped $110 on Aug. 28, when they closed at $110.10.

On Thursday, the contract gained 1.1% as a weekly government report roughly matched expectations for crude supplies.

Oil prices are likely to climb further as the conflict in Syria “morphs into a multi-country standoff,” Jeffrey Sica, president and chief investment officer of Sica Wealth Management, said in a recent email.

“The staring contest between Russian and U.S. ships in the Mediterranean is accomplishing nothing to stabilize the situation,” he said. “The greater the likelihood of a broad-based conflict, the more oil will surge.”

At a Friday news conference at the Group of 20 summit, Russian President Vladimir Putin said his country would continue assisting Syria if the country is attacked, according to press reports.

U.S. President Barack Obama has said he’s considering military action against Syria for the country’s alleged use of chemical weapons.

Leaders from the G-20 nations are divided over whether to strike Syria. The Middle Eastern country isn’t a major oil producer, but a wider conflict could lead to supply disruptions in that oil-rich region.

The oil market also digested the monthly U.S. jobs report, which showed the economy added 169,000 jobs, missing expectations.

The soft reading fueled some speculation that the Federal Reserve is now less likely this month to start to reduce its stimulus, which has boosted riskier assets such as oil. Most economists had been expecting that tapering would start in September.

“Anemic economic improvements and assurance from President Obama that stimulus will be withdrawn slowly have significantly increased the likelihood of inflation in commodities prices,” Sica said.

On London’s ICE Futures exchange Friday, October Brent crude rose 86 cents, or 0.8%, to end at $116.12 a barrel.

The outperformance for West Texas Intermediate crude on Nymex versus Brent crude is “a big hat-tip to the whole ‘bad is good’ notion that today’s below-par U.S. employment report will delay the Fed from tapering this month,” said Smith.

Back on Nymex, October natural gas fell 4.5 cents, or 1.3%, to $3.53 per million British thermal units, for a loss of 1.4% on the week.

October gasoline rose nearly 2 cents, or 0.6%, to $2.85 a gallon. The contract ended the week 1.3% lower. October heating oil advanced 2 cents, or 0.8%, to $3.16 a gallon, with the contract 0.9% higher than a week ago.

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