THE price of oil fell to near US$109 a barrel yesterday, easing off a two-year high, after official figures showed a rise in US crude inventories.

By early afternoon in Europe, benchmark oil for October delivery was down 65 cents to US$109.45 a barrel in electronic trading on the New York Mercantile Exchange.

The contract rose US$1.09, or one per cent, to US$110.10 a barrel on Wednesday, driven higher by the prospect of Western military intervention in Syria’s civil war. That was its highest closing price since May 3, 2011. Earlier in the day, oil charged as high as US$112.24.

The Energy Department’s Energy Information Administration said crude stocks for the week ended August 23 rose by three million barrels to 362.1 million barrels. In contrast, analysts had been expecting a slight fall in crude stockpiles. Rising supplies tend to hold oil prices down.

Still, JBC Energy said current developments, such as low spare capacity in Saudi Arabia and signs of an improving global economy, pointed to tighter markets.

The oil price has surged 27 per cent since touching a low for the year of US$86.68 on April 17. Recently, it has been propelled higher by political unrest in Egypt and the threat of US intervention in Syria’s civil war. Neither country is a major oil exporter, but traders are concerned

that the violence could spread to more important oil-exporting countries or disrupt major oil transport routes.

Despite the higher geopolitical risks, analysts at Commerzbank in Frankfurt dismissed recent predictions that oil prices could rise to US$150 a barrel as “unfounded scaremongering.”

“The present situation simply does not warrant such a price,” Commerzbank said. “Were the West to launch only a limited military strike against the Syrian regime, it is likely that oil prices would then fall again just as quickly again as they increased.”

Oil prices were also under pressure from a stronger dollar, which makes crude priced in dollars more expensive and a less attractive investment for traders using other currencies. On Thursday the euro was down to US$1.3255 from US$1.3340 late Wednesday in New York.

Markets were also looking forward to the release later Thursday of the Commerce Department’s second estimate of how fast the US economy grew in the April-June quarter and the Labour Department’s report on the number of Americans who applied

for unemployment benefits last week.

Brent crude, the benchmark for international crudes, fell 92 cents to US$115.69 a barrel on the ICE Futures exchange in London.