Oil climbs towards $92; tension rises over Syria

Tue Jun 26, 2012 7:07am EDT
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By Peg Mackey

LONDON (Reuters) - Oil climbed towards $92 per barrel on Tuesday as the prospect of a decline in U.S. crude stockpiles and rising tension over Syria offset concern about a weakening economic outlook.

NATO member states condemned Syria on Tuesday for its shooting down of a Turkish military jet last week and Ankara warned Damascus against any further military moves.

Brent crude rose 66 cents to $91.67 a barrel by 0647 EDT after reaching a session high of $92.04. U.S. crude climbed edged 5 cents higher to $79.26.

"The Turkey-Syria situation probably prompted some short covering. The market has been trending down solidly for a couple of weeks, so a bounce from the lows is not that surprising," said Tony Machacek, an oil futures broker at Jefferies Bache.

Oil prices are expected to be underpinned by forecasts for a 700,000-barrel drop in U.S. crude oil stockpiles last week and supply disruptions in Norway and Argentina due to labor strikes.

"But economically, everything still points to the downside," said Machacek.

The American Petroleum Institute will release its latest weekly inventories report at 1630 EDT.

The appetite for riskier assets is expected to stay low as the debt crisis grinds on in the euro zone, where Cyprus became the fifth country to seek emergency funding for its troubled banks.   Continued...

Fuel pumps are seen at a Cepsa Petroleum petrol station in Cuevas del Becerro, near Malaga, southern Spain March 4, 2011. REUTERS/Jon Nazca