SINGAPORE: Brent crude nudged higher to stay above $98 a barrel on Thursday amid geopolitical concerns in the Middle East, although worries about ample supply and weak demand that dragged prices to 17-month lows in the previous session kept a lid on gains.
An escalation in the United States' campaign against Islamic State militants with plans for air strikes for the first time in Syria and more attacks in Iraq have raised fears of reprisals, said Tony Nunan, oil risk manager at Japan's Mitsubishi Corp.
"People are worried about unexpected consequences of an escalation with the potential of a greater reaction from militants," Nunan said. "The geopolitical risk is not out of the woods.
The potential situation does not look any better." President Barack Obama told the American public on Wednesday that he had authorised air strikes in Syria, while boosting the number of US advisers in Iraq and launching a US training effort for Syrian rebels.
Brent crude for October delivery was trading up 2 cents at $98.06 a barrel by 0354 GMT, after closing down $1.12 in the previous session.
It hit an intraday low of $97.60 on Wednesday, its weakest since April 18, 2013.
US crude rose 12 cents to $91.79 after falling to $91.22 in the previous day, the lowest since May 2, 2013.
But oil prices on both sides of the Atlantic are down about 2 percent to 3 percent this week, dragged down by high global supplies at a time when demand is weak.
The Organization of the Petroleum Exporting Countries has cut its forecasts for demand for OPEC crude this year and next, pointing to a surplus of more than 1 million barrels per day in 2015 if OPEC keeps output at current levels.
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