2013.08.2806:04:59UTC+00WTI at two-year high on concern Syria issue will continue

West Texas Intermediate crude increased to the highest price since May 2011 on concern that conflict in Syria may spread and threaten oil supplies from the Middle East.

Futures acquired as much as 3 percent in New York, lengthening yesterday’s 2.9 percent hike. The U.S., France and Britain moved closer to a military strike as they laid the legal groundwork to justify action after Syria allegedly used chemical weapons. London’s Brent may rise to as high as $150 a barrel, from more than $117 today, if conflict disrupts supply, according to Societe Generale SA. Libya stated that output may have slide under 200,000 barrels a day, the worst since the 2011 uprising versus Muammar Qaddafi.

Syrian Unrest

Brent may gain “briefly” to $150 a barrel if the conflict in Syria spreads to other parts of the Middle East, causing supply cuts, Societe Generale said in a report e-mailed today. A U.S.-led attack on Syria is possible within the next week, the bank predicted. Brent traded at $147.50 on July 11, 2008, the highest intraday price on record.

Military Strike

Tomahawk cruise missiles may be launched at night versus hundreds of Syrian targets if the U.S. and allies launch a military strike, said Jeffrey White, a defense fellow at the Washington Institute for Near East Policy and former Defense Intelligence Agency analyst.

Relative Strength

Brent’s rally may stall as a technical indicator shows futures may be rising too quickly for further gains to be sustainable. The 14-day relative strength index yesterday surged above 70 for the first time since February, signaling the market is overbought, according to data compiled by Bloomberg. Today’s reading is higher than 78.

U.S. gasoline inventories pulled back by 1.13 million barrels in the week ended Aug. 23, the industry-funded American Petroleum Institute said yesterday. An Energy Information Administration report today may display supplies backslide by 1.38 million, according to the median estimate of 12 analysts surveyed by Bloomberg News.

Crude stockpiles spiked 2.47 million barrels, the API said. The EIA, the Energy Department’s statistical arm, will probably report a gain of 750,000 barrels, the survey shows.

The API in Washington collects supply information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey.