LONDON (Reuters) - Oil held near its highest in nearly three years on Wednesday, supported by political tension in the Middle East, although evidence of rising U.S. crude supply acted as a counterbalance.
Brent crude has gained 5.7 percent this week, rising to $71.34 a barrel on Tuesday, the highest since late 2014, although the price has since fallen back and was $70.98 a barrel by 0907 GMT LCOc1, down 6 cents.
U.S. crude futures CLc1 were at $65.55 a barrel, up 4 cents on the day.
The United States and its allies are considering air strikes against Syrian President Bashar al-Assad’s forces following a suspected poison gas attack last weekend.
Pan-European air traffic control agency Eurocontrol said late on Tuesday that air-to-ground and/or cruise missiles could be used within the next 72 hours, warning of intermittent disruption of radio navigation equipment.
Syria is not a significant oil producer, but any sign of conflict in the region tends to trigger concern about potential disruption to crude flows across the wider Middle East, home to some of the world’s biggest producers.
There are also concerns that the United States could renew sanctions against Iran.
“The focus right now is definitely on a possible military strike against Syria,” Commerzbank head of commodity research Eugen Weinberg said.
“We think the fundamentals do not justify the current price, but unfortunately, the market is focusing more on the politics and ignoring some of the warning signs, especially the hike in U.S. oil production.”
Chinese President Xi Jinping on Tuesday sounded a conciliatory note on trade, which soothed some of the concern about