Oil rebounds to three-week highs on Middle East fears

Global oil prices soared to three-week peaks on Wednesday, reversing earlier losses as traders focused once more on supply worries linked to simmering tensions in the crude-rich Middle East. In afternoon London trade, Brent North Sea crude for delivery in November raced as high as $115.59 per barrel. It later stood at $114.79, up 29 cents from Tuesday's closing level. New York's main contract, West Texas Intermediate (WTI) or light sweet crude for November, jumped as high as $93.66 before pulling back to $92.59, down 19 cents. Oil had already rallied by about $3 on Tuesday, with Brent oil striking a three-week high point on heightened concerns that the Syrian conflict could spread to Turkey. "Crude oil is again firmer," said GFT Markets analyst Fawad Razaqzada on Wednesday. "Both Brent and WTI ...look set to push further higher. Judging by the reaction of equities, one can only assume this rally is mostly due to raised supply-side concerns arising from the Middle East than anything else." "At the moment, supply worries are certainly outweighing demand concerns," added Razaqzada. Turkey's top military commander warned Wednesday of a tougher response if Syrian shells keep hitting Turkish soil, as the Damascus regime launched a new onslaught against rebels in besieged Homs. Damascus meanwhile rejected a call by UN chief Ban Ki-moon for it to declare a unilateral ceasefire, insisting that rebels fighting the government must stop the violence first. "We told Ban Ki-moon to send emissaries to the countries which have influence on the armed groups, so that they put an end to the violence," foreign ministry spokesman Jihad Maqdisi said. Maqdisi said that twice during the abortive UN military observer mission deployed to Syria between April and the end of August, Damascus had implemented a ceasefire. In earlier deals on Wednesday, oil prices had drifted lower on the back of the gloomy demand outlook after the International Monetary Fund slashed its economic growth forecasts. "Recent solid US economic data provide some initial relief to the markets, but the global economic prospects remain fairly weak and uncertain with potential for a serious slowdown in the oil demand," said analyst Myrto Sokou at the Sucden Financial Research brokerage. This week, the World Bank and the Asian Development Bank have also slashed their growth forecasts for Asia, a region often seen as a key engine for the world economy as Western economies falter. In addition, the International Monetary Fund slashed its 2012 global growth forecast to 3.3 percent from its previous estimate of 3.5 percent. Growth will also only hit 3.6 percent next year -- lower than the 3.9 percent predicted in July -- as even powerful emerging economies like China, India and Brazil hit the brakes, the Fund said.