Crude Oil Rises a Third Day on Middle East Shipment Concern

By Sophie Tan and Angela Macdonald-Smith

Oct. 11 (Bloomberg) -- Crude oil rose for a third day on concern that Middle East oil shipments may be disrupted as Turkish forces threatened to attack rebels in northern Iraq.

Turkish Prime Minister Recep Tayyip Erdogan ordered preparations for a possible military strike on bases of the Kurdistan Workers' Party in Iraq, a move opposed by the U.S. Oil also gained yesterday before the release of the U.S. government's weekly inventory report.

``We haven't seen any real geopolitical disturbances in the past few months and the fact that there are verbal threats is enough to provide support to oil prices despite expectations that U.S. crude oil inventories probably rose this week,'' said Steve Rowles, analyst at CFC Seymour Ltd. in Hong Kong.

Crude oil for November delivery rose as much as 34 cents, or 0.4 percent, to $81.64 barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $81.61 at 3:04 p.m. Singapore time.

Yesterday, the contract rose $1.04, or 1.3 percent, to $81.30. Prices are 41 percent higher than a year ago. Futures touched $83.90 on Sept. 20, the highest since the contract was introduced in 1983.

Turkish authorities said yesterday they arrested 20 militants from the Kurdistan Workers' Party, or PKK, at Turkey's main border crossing with Iraq. Turkey has vowed a crackdown on rebels of the PKK, including a possible attack on the group's camps in northern Iraq.

``The Turkish government has okayed the use of force against the Kurdish rebels, adding to the general global underlying unease,'' said Jonathan Benjamin, senior analyst at New Wave Energy LLC in Aptos California. ``I would be surprised to see a real downward move before the stats come out and we see more on the fundamentals.''

Brent, Inventories

Brent crude oil for November settlement rose as much as 40 cents, or 0.5 percent, to $79 a barrel on the London-based ICE Futures Europe exchange. It was at $78.88 a barrel at 2:43 p.m. Singapore time.

U.S. crude-oil inventories probably rose 1.08 million barrels last week as refineries reduce fuel production before they perform seasonal maintenance, a Bloomberg News survey indicated. Supplies of distillate fuels, a category that includes heating oil and diesel, probably fell 775,000 barrels, while gasoline inventories probably declined 375,000 barrels, according to the median of responses by 16 analysts before the Department of Energy's report later today.

``Crude oil inventories will rise in the refinery maintenance season and there hasn't been any unplanned shutdown so far to raise inventories beyond what is being expected,'' said CFC Seymour's Rowles.

Crude oil inventories in the previous week, ended Sept. 28, were 9.3 percent higher than the five-year average, the Energy Department said last week. The department is scheduled to release its weekly report on inventories at 10:30 a.m. in Washington today, a day later than usual because of the Oct. 8 Columbus Day holiday.

To contact the reporters on this story: Sophie Tan in Singapore at ; Angela Macdonald-Smith in Sydney at