Published By : 24 Nov 2015 | Published By : QYRESEARCH
Oil prices went up on Tuesday after the dollar weakened and a Russian jet fighter was shot down by the Turkish military along the Syrian border.
The possibility of weaker demand in the coming year and concerns regarding the global crude glut keep oil prices at a low of six years. However, the price gains on Tuesday indicate that geopolitical risks can still upset the oil market and traders are concerned that oil production in the Middle East could possibly be disturbed.
Commodities analyst at SEB Markets Bjarne Schieldrop said that news of the crashing of a military jet in Syria reminds people that there is still significant risk in the Middle East.
In the past year, violence in Syria has had very little impact on the prices of oil since Syria is not a leading producer of crude. Moreover, other countries in the region such as Iraq and Saudi Arabia have in recent months stepped up their output.
Iraq and Saudi Arabia are member nations of the Organization of the Petroleum Exporting Countries. The organization is most likely to retain its policy of producing oil at higher rates when it holds its meeting scheduled for December 4.
Sweet and light crude to be delivered in January climbed 3 per cent or US$ 1.27 to reach US$ 43.02 per barrel on the New York Mercantile Exchange. The global benchmark Brent went up 3.1 per cent or US$ 1.37 to reach US$ 46.20 per barrel on ICE Futures Europe.
The price rise on Tuesday was also aided by a weakened US dollar. The Wall Street Journal Dollar Index went down 0.2 per cent. Since oil is priced in US dollars, as the greenback softens, holders of other currencies find it cheaper.
Diesel futures climbed 2.1 per cent to settle at US$ 1.4025 per gallon. Gasoline futures, on the other hand, went up by 4.6 per cent to reach US$ 1.374 per gallon.