Oil futures closed US trading above Friday's settles Monday, after driving higher shortly ahead of the 2:30 p.m. EDT (1830 GMT) NYMEX market settle on geopolitical concerns arising out of the escalating conflict in Syria.
NYMEX June crude closed 55 cents higher at $96.16/barrel, after opening the US session at $94.90/b. The front-month contract had earlier traded at a more than one-month high of $97.17/b in overnight electronic trading.
ICE June Brent, which outpaced the NYMEX complex throughout the majority of the session, settled $1.27 higher at $105.46/b, after hitting a three-and-a-half week high of $105.54/b immediately ahead of 2:30 p.m. EDT. The June contract traded as low as $103.89/b early in the morning US session.
The differential between the two front-month crude contracts settled at $9.30/b, up 72 cents from Friday.
An overnight rally in crude oil prices was attributed to further news out of Syria, after Israel launched air raids on three military sites over the weekend. The escalation in regional hostilities prompted the EU to warn of a "spillover effect" in the region Monday.
The Israeli attacks "drove the market a lot overnight and then it kind of edged off all through the day," said Bill O'Grady, chief market strategist at Confluence Investment Management. "Suspect that's why we're so much more up on Brent than on WTI."
"In one sense, Syria isn't a major oil producer, and it's not like this is an immediate threat to any oil production, but you will always have the worry of one of these wars regionalizing."
There was no immediate Syrian retaliation to the Israeli strike, although Damascus said that it would respond to the attack, according to an AFP report.
"An all-out war between Israel and Syria would certainly boost the geopolitical premium for oil and send WTI back above $100," Tradition Energy analyst Addison Armstrong said in a note.
Product markets were also higher Friday, boosted by the surge in Brent prices. NYMEX June RBOB settled 4.03 cents higher at $2.8657/gallon after opening the session at $2.8078/gal. NYMEX June heating oil also closed above Friday's settle, up 3.58 cents at $2.9202/gal.
ICE May gasoil was up $7.50/mt at $865.50/mt at 2:30 p.m. EDT.
"We're in between seasons right now," O'Grady said of the relatively muted product markets. "It's a little too early for gasoline season -- the weather has also been really nasty in parts of the US -- and we're not seeing any indications that driving is returning to trend. By the middle of the month, we'll start to pick up ... . Part of this is seasonal."
Equity markets also rose in afternoon US trade after a mixed performance overnight, helping to lend some support to the rally in crude prices. At 2:30 p.m. EDT, the S&P 500 was 0.31% higher at 1,619.36, while the Dow Jones industrial average was up a more moderate 0.08% at 14,986.5 after spending much of the session hovering below Friday's settle.
The US dollar was firmer against a basket of global currencies as weak services PMI and retail sales data out of Europe weighed on the euro, and the yen climbed closer to the 100 yen per dollar mark. At 2:30 p.m. EDT, the US Dollar Index was up 0.24% at 82.318.
