Oil prices rise on positive US data

Oil prices rose Thursday, boosted by a larger-than-expected drop in US crude stockpiles, positive US economic data and concerns about a looming military strike against Syria. New York's main contract, West Texas Intermediate for delivery in October, jumped $1.14 from Wednesday to close at $108.37 a barrel. The European benchmark, Brent North Sea crude for October, climbed 35 cents to settle at $115.26 a barrel in London trade. A surprisingly strong drop in US commercial crude oil inventories renewed market hopes for improved demand in the world's largest energy consumer and particularly supported the WTI price gains. The Department of Energy said US crude stockpiles fell by 1.8 million barrels in the week ending August 30. Analysts on average had estimated a much smaller decline of 200,000. The drop was the fourth decline in the past five weeks, Robert Yawger of Mizuho Securities USA noted. The US benchmark WTI contract also benefited from encouraging US economic data, including signs of slow but steady improvement in the job market. "The positive economic data this morning, which come on the heels of strong data yesterday, are consistent with the strength in the economy, which is always supportive for crude oil demand," said John Kilduff of Again Capital. The upbeat data has fueled speculation that the Federal Reserve could begin to taper its massive bond-buying program soon, perhaps as early as its September 17-18 monetary policy meeting. Meanwhile, the threat of a US-led military strike against Syria in retaliation for the Assad government's alleged chemical weapons attack continued to cast a cloud over the markets. Although Syria is not a major oil producer, investors fear that an attack could roil the oil-rich Middle East and reduce crude supplies. Phil Flynn of The PRICE Futures Group said that Brent crude remained vulnerable. "Not only does the market worry about war, but it worries about tightness of supply," he said. "High quality crude is getting harder to get and that means that Brent crude is most likely to spike. Not to mention Iraq where pipeline attacks and violence has impacted Iraq production."