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Oil retreats from 2-year high, falls below $109

Benchmark oil for October delivery was down $1.15 to $108.95 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange.

The contract rose $1.09, or one per cent, to $110.10 a barrel on Wednesday, driven higher by the prospect of Western military intervention in Syria’s civil war. That was its highest closing price since May 3, 2011. Earlier in the day, oil charged as high as $112.24.

The American Petroleum Institute said crude stocks for the week ended August 23 rose by 2.47 million barrels to about 366.6 million barrels. Rising supplies tend to hold oil prices down.

Still, JBC Energy said current developments, such as low spare capacity in Saudi Arabia and signs of an improving global economy, pointed to tighter markets.

The oil price has surged 27 per cent since touching a low for the year of $86.68 on April 17. Recently, it has been propelled higher by political unrest in Egypt and the threat of US intervention in Syria’s civil war. Brent crude, the benchmark for international crudes, fell $1.16 to $115.45 a barrel on the ICE Futures exchange in London.