Published : 2013-09-03 20:49
Updated : 2013-09-03 20:49
LONDON (AFP) - Oil briefly jumped on Tuesday after Russia said it had detected the launch of two ballistic missiles heading towards the eastern Mediterranean, dealers said.
Brent North Sea crude oil for October delivery climbed to $115.74 per barrel, before pulling back to $115.25, up 92 cents from Monday's closing level.
New York's main contract, West Texas Intermediate (WTI) for October, rallied as high as $107.77 per barrel. It later stood at $107.28, down 37 cents from Monday.
"This morning saw crude oil prices spike higher on what turned out to be a false alarm," said analyst Fawad Razaqzada at trading firm GFT Markets.
"Russia said two missiles appeared to be heading towards the eastern Mediterranean, leading to panic buying of crude oil amid fears of imminent strike on Syria.
"However the rumors were quickly quashed after Israel said the rocket launch was just a test of missile defense. Nevertheless, crude oil prices remained elevated ... due to continued uncertainty in the region."
Missiles that Russia reported were launched in the Mediterranean Sea on Tuesday were part of a joint American-Israeli military exercise, Israel's media said.
The reports said Ankor-type missiles was directed from bases in the Mediterranean and in the centre of Israel.
Moscow's defense ministry, as cited by Russian news agencies, said its early warning system had detected the launch of two ballistic missiles from the central part of the Mediterranean fired towards the Sea's eastern coastline on Tuesday morning.
Israel's army said it was "not familiar" with any missiles being fired in the Mediterranean.
In earlier deals on Tuesday, the oil market had fallen on receding fears of an immediate U.S. intervention in Syria but upbeat global economic data capped losses, analysts said.
"Concerns that Syria might retaliate when the U.S. eventually strikes have already been priced in by investors," Kelly Teoh, market strategist at IG Markets in Singapore, told AFP.
"The focus for now will be on the global macroeconomic situation, and investor sentiment right now is faring better than in previous months," she said.
The potential for a U.S. strike on Syria for its alleged use of chemical weapons has been put on the backburner after President Barack Obama said he will seek support for action from Congress, which will return from recess on Monday.
The oil market had surged last week, with New York crude striking $112.24 on Wednesday -- reaching the highest level since early May 2011.
Brent oil had soared to $117.34 a barrel, last seen in late February.
"The broader market remains nervous over any headlines relating to (Syria) and will still see choppy trading to come," added VTB Capital analyst Andrey Kryuchenkov.