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US Crude moved up a drop on Tuesday as increased tension in Syria raised the concern for supply glitch again. On Monday crude oil prices declined for the fifth straight session, on concerns about slowing economies, expected production and pipeline restarts and bigger-than-expected fall in Japan's exports reflecting the global economic slowdown.
US Crude fell more than a percent on yesterday to trade below the 89.00 price level as restarting of TransCanada pipeline increased the supply and offset the concerns on Middle East. A bottleneck at a major oil pipeline has led to stoppages at refineries in Germany and the Czech Republic, further limiting Europe's tight fuel supply ahead of winter and underpinning diesel prices already near record highs.
However, looming geopolitical concerns emanating from the Middle East is providing some amount of support to the energy complex. In the latest, seven people were killed and dozens wounded in gun battles in the Lebanese capital Beirut and coastal Tripoli due to unrest linked to the conflict in neighboring Syria.
With a very light eco and events calendar, crude oil will be very sensitive to geological tensions.
Yesterday, the head of the International Energy Agency (IEA) said that the global oil market is well-supplied and only a serious supply disruption will merit any release of strategic oil stocks, "The market is sufficiently well supplied," Maria van der Hoeven, executive director of the IEA, the West's energy watchdog, said at the Singapore International Energy Week.
Iran's exports have fallen sharply in the wake of the sanctions as consumers struggle both to pay for the oil and to secure insurance cover for tankers to ship the crude.
"We keep monitoring the situation, as we can see that there is around 1 million barrels a day of Iranian oil or maybe even a little more not in the market anymore," Van der Hoeven said.
On the subject of demand and forecast the IEA director said slowing economic growth in Asia is adding to uncertainty in the oil market. The world is becoming increasingly dependent on Asia to supply oil products, the IEA’s Maria van der Hoeven said at a conference in Singapore. The IEA has lowered its forecast for global demand growth for 2012 by 500,000 barrels a day, partly because of signs of slowing in China, the Paris-based agency said in its Medium Term Oil Market Report.
U.S. natural gas futures ended lower on Monday for the first time in four sessions, pressured by profit-taking after an early front month moved higher and by reports extended forecasts for cold weather had been revised to be milder. Front-month gas futures on the New York Mercantile Exchange ended down 16.5 cents, or near 5 percent, at $3.452 per million British thermal units after climbing early to a new 2012 high of $3.648.