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Oil prices increased today, holding at more than $115 a barrel, following the US Senate’s approval to proceed with military action in Syria.

Brent crude added 44 cents to $115.35 a barrel, while US oil went up by 57 cents to $107.80, reported Reuters.

The Senate Foreign Relations Committee favoured a resolution which has limited intervention in Syria to 60 days, extended possibly by 30 days, and bars the use of US troops for ground combat.

However, prices are unlikely to increase much on expectations that a strike could be limited, unless the conflict spreads out in the Middle East.

Investors have been worried the strike in Syria, although not a key oil producer, could spread unrest and disturb supplies in the Middle East, which pumps a third of the world’s crude.

Moreover, supply loss from Libya too has added to the already struggling markets. Outages in the Middle East and Africa have exceeded the three million barrel mark in a day, accounting for about 3.5% of global oil demand.

"Investors have been worried the strike in Syria, although not a key oil producer, could spread unrest and disturb supplies."

Oil prices, especially US crude futures, received some support from an industry report showing a steep fall in crude stockpiles in the world’s biggest consumer.

In its report, the American Petroleum Institute (API) said crude inventories fell by 4.2 million barrels last week to 362 million, against an estimated 1.3 million decrease.

The data, which showed that automobile sales in US gained at their fastest pace since October 2007, also underpinned the US benchmark.

Investors are also awaiting details on when the Federal Reserve could decrease its economic stimulus plans, which will have an impact on commodities.


Image: Oil prices gain as US senate approves Syrian strike. Photo courtesy of freedigitalphotos.net.

Energy