After slipping in early on Friday morning due to a bleak global demand outlook and rising US inventories, Brent crude oil bounced over $105 as geopolitical tension in the Middle East threatened to escalate. The commodity traded at $105.27 at 10:30 GMT on Friday morning.
Data this week showed that US gasoline stocks on the East Coast were at their highest level since February of 2012. The news underscored investor concern that US inventories were rising during the nation's peak driving season, when stockpiles are normally depleted.
Also weighing on prices was a report from the International Energy Agency which trimmed its global demand outlook. The organization indicated that the US driving season would not do enough to save tumbling oil prices.
However, prices were buoyed by news early on Friday which suggested that the Syrian civil war is escalating and could create supply interruptions. The Wall Street Journal reported that US President Barack Obama has agreed to arm rebels fighting Syrian President Bashar al-Assad. The report came shortly after the White House confirmed that Demascus had used chemical weapons in during the war. The decision could cause the war to spill over the nation's borders as it becomes a larger conflict between the US and the Iranian Hezbollah.
Adding to pressure is the upcoming Iranian presidential election which could affect Western diplomats' negotiations with the nation over its nuclear capabilities. Most are not expecting the outcome of the elections to change the current sanctions on Iranian oil, which have kept the majority of the nation's oil from the markets.
Continue Reading Below
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Copyright Benzinga. All rights reserved.