The price of oil rose above $108 a barrel Thursday as traders remained wary of developments in Syria even as global crude supplies were forecast to rise and fresh data showed only a slight drop in U.S. oil inventories.
By early afternoon in Europe, benchmark oil for October delivery was up 82 cents to $108.38 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 17 cents to close at $107.56 on the Nymex on Wednesday.
While the American Petroleum Institute released data Tuesday showing U.S. crude supplies fell 2.9 million barrels to 359.5 million barrels for the week ending Sept. 6, Wednesday's release of the U.S. Energy Department's estimate -- the market benchmark -- put the drop at just 219,000 barrels.
The slight gain in oil prices on Wednesday and Thursday followed losses Monday and Tuesday that totaled $3.14 a barrel, the result of diplomatic efforts to avoid a U.S. strike against Syria. The Obama administration has threatened action against President Bashar Assad, whom the U.S. says is responsible for a deadly chemical weapons attack against civilians.
Syria is not a major oil producer, but oil traders say the possibility of a wider conflict could interrupt production and shipping routes in the Middle East and cause prices to rise.
"Prices are well supported around these levels as the uncertain outlook has prompted some buying," said a report from Sucden Financial Research in London, noting that "investors remain cautious to any potential near-term tightness in supply."
Developments in the Middle East notwithstanding, the International Energy Agency said global crude supply "looks set for an upward jump" in the last quarter of the year, bolstered by the end of seasonal maintenance on oil rigs in the North Sea and the Gulf of Mexico; increased oil output in North America; and strong production in Saudi Arabia.
"Despite continued tensions, the recent tightening of oil fundamentals ... looks set to give way to somewhat easier conditions in the fourth quarter," the Paris-based IEA said in its monthly oil market report.
With most eyes on Syria, the EIA noted that there has been "little visible progress" in attempts to get Libya's oil industry back on track.
Striking government employees at oil export terminals have cost Libya more than $5 billion in losses in the past months and a board member of Libya's National Oil Corp said last weekend that oil exports have almost entirely stopped.
Before the 2011 war which ousted dictator Moammar Gadhafi, Libya was exporting about 1.6 million barrels a day.
The EIA also said global demand would rise to 92 million barrels a day in 2014 from 90.9 million barrels a day this year. Those figures were minimally higher than the IEA's previous forecast, issued in August.
Brent, the benchmark for international crudes, was up 90 cents to $112.40 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
-- Wholesale gasoline rose 4.48 cents to $2.757 per gallon.
-- Natural gas lost 1.9 cents to $3.548 per 1,000 cubic feet.
-- Heating oil added 3.32 cents to $3.105 per gallon.