Speculative buyers drove October Crude Oil futures higher this week following reports of an imminent attack on Syria by the United States. On August 27, headline news across the world drove investors out of higher-risk assets and into lower-yielding investments.
Additionally, in almost blueprint-like fashion, speculators bought crude oil on concerns the military action against Syria would lead to disruptions in the supply of oil coming out of the Middle East.
The oil market surged to a two year high on August 28, but the rally came to a screeching halt when investors began to question the length and scope of the possible attack.
Comments from U.S. President Barack Obama apparently put some doubt into the minds of speculators when he said that a “tailored, limited” military style strike could be enough to deter any future use of chemical weapons. This comment dampened rumors of Russia, China and other Syrian allies getting involved after the initial attack. Essentially, speculators who bought oil in anticipation of a long-term conflict pared positions due to the uncertainty around the length of the potential attack.
At the same time President Obama was helping to put in a top, the U.S. Energy Information Administration (EIA) released its weekly petroleum inventory report. The report showed that crude inventories increased by 3 million barrels last week. In addition, crude oil inventory reached 362 million barrels, keeping it near the…