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MW: Oil prices rise after Turkey shoots down jet claimed by Russia
 
8
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Oil prices rise after Turkey shoots down jet claimed by Russia

Published: Nov 24, 2015 5:44 a.m. ET

8
Downing is reminder of global risk
Getty Images
File image of a Russian Sukhoi Su-24 bomber, the type of plane Turkey shot down at the Syrian border.
By
JENNY
W. HSU
GEORGI
KANTCHEV
LONDON — Oil prices rose on Tuesday after news that Turkey shot down what is likely to be a Russian jet over Syria and a softer U.S. dollar supported prices across the commodity spectrum.

Turkish authorities didn’t give the nationality of the jet, but Russia separately said one of its jets had been downed in the region. This has fueled concerns among investors about the continuing turmoil in the Middle East, the world’s most prolific oil producing regions.

“News of a military jet crashing in Syria is a reminder that there is still substantial risk in the Middle East,” said Bjarne Schieldrop, commodities analyst at SEB Markets.


Brent crude LCOF6, +1.81% , the global oil benchmark, rose 1.1% to $45.33 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLF6, +1.63% were trading up 1.1% at $42.22 a barrel.

A softer U.S. dollar also supported prices on Tuesday. The Wall Street Journal Dollar Index BUXX, -0.08% , which tracks the dollar against a basket of other currencies, rose 0.1% on Monday. As oil is priced in dollars, it becomes more expensive for holders of other currencies as the greenback appreciates.

Comments by Saudi Arabia that it is ready to cooperate with other producers to support the market added to the bullish sentiment. On Monday, Saudi Arabia’s state-controlled news agency quoted the cabinet in a statement as saying it was ready to work with the members and nonmembers of the Organization of the Petroleum Exporting Countries to maintain the stability of the market.

“This could be just empty promises,” said Daniel Ang, energy analyst at Phillip Futures. “At the end of the day, as long as nothing concrete is said, we would hold our horses on a bullish run for prices.”

Meanwhile, oil continues to suffer from the oversupply on the market. With OPEC and other major producers like Russia pumping crude at near record highs, analysts see the mismatch between supply and demand, which has battered prices since last year, continuing well into 2016. Expectations of a stronger U.S. currency is also bearish for oil prices with the market projecting the U.S. Federal Reserve will raise interest rates at its next meeting in December.

“Irrespective of [Saudi Arabia’s] statements we still think that the oil price has a challenging time ahead as we move into the first half of 2016’s with rising stocks… and a likely stronger USD,” Schieldrop said.

Later in the day, traders will be eyeing the weekly U.S. crude inventories data, released by the American Petroleum Institute, an industry group. The official data by the U.S. Energy Information Administration will be published on Wednesday and analysts expect another increase.

Nymex reformulated gasoline blendstock RBZ5, +2.31% — the benchmark gasoline contract — rose 1.3% to $1.30 a gallon. ICE gasoil changed hands at $428.75 a metric ton, down $3.75 from the previous settlement.
Source