Syria anxiety pushes oil prices higher

Oil prices Wednesday continued to rise in anticipation of a western crackdown on Syria, propelling the US oil futures contract to the highest level since May 2011.

US benchmark West Texas Intermediate for delivery in October rose $1.09 to $110.10 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in October added $2.25 to close at $116.61, its highest level since mid-February.

Top officials from the US and its western allies have threatened a military response on Syria in the wake of a purported August 21 chemical weapons Syrian attack on its citizens that left hundreds dead.

A US State Department spokeswoman said the US was considering working with allies on the plan in spite of the Russian opposition at the United Nations Security Council.

"The situation is deteriorating," said Bart Melek, head of commodity strategy at TD Securities. "We are pricing into the market the probability that the potential conflict in Syria gets escalated beyond their borders."

Carl Larry, analyst at Oil Outlooks and Opinions, said traders are buying oil out of concern of a bigger disruption.

"Right now you are seeing that people are buying out of safety concerns, concerns that if something bad happens they are going to be covered," Larry said.

But Greg Priddy, director of global oil at risk consultant Eurasia Group, said the market may reevaluate oil if a military action is completed and is as limited as expected.

Traders are reacting to those "kind of broad Middle East fears that are not necessarily connected to any specific volume of oil, but just that something awful is going to happen," Priddy said.

"Once the smoke clears from the military operation, this market is going to look pretty overbought."

Wednesday's oil price gain came despite a bearish weekly US oil inventory report. US commercial oil stocks rose by about 3 million barrels, compared to a 300,000 barrel decline forecast by analysts.