--Crude rallies in wake of refinery fire

--Gains reverse nearly all of Wednesday's losses

--Syria-Turkey skirmish lifts oil

   By Dan Strumpf 

NEW YORK--Oil futures rallied sharply Thursday, reversing much of the previous day's losses, as disruptions to the gasoline market and a border skirmish between Turkey and Syria pulled prices higher.

Light, sweet crude for November delivery settled $3.57, or 4.1%, higher at $91.71 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently rose $4.25, or 3.9%, to $112.42 a barrel.

A rally in the gasoline market pulled oil prices higher after Exxon Mobil Corp. (XOM) reported a fire at a unit of its Baytown, Texas, refinery. The fire was extinguished by Wednesday evening, Exxon said, but would affect an unspecified amount of production.

The Baytown facility is the U.S.'s largest operating refinery, a five-mile facility capable of churning 584,000 barrels a day of crude into refined products. November reformulated gasoline blendstock, or RBOB, settled 14.34 cents, or 5.1%, higher at $2.9429 a gallon on the news.

"The Baytown problem must be a pretty serious situation," said Tony Rosado, broker at Dorado Energy Services in New York. "This is a physical scenario impacting the industry and pricing."

Also lifting gasoline was a partial shutdown of the Colonial Pipeline. The operator said Lines 19 and 20, which transport gasoline and distillate products from Atlanta to Nashville, were shutdown due to reports of a gasoline odor.

Events such as refinery or pipeline outages often lift fuel prices as supplies grow tighter and traders scramble to meet obligations. The rise often lifts the price of crude.

Thursday's rally nearly reversed all of crude's losses on Wednesday, when oil plunged more than 4% to its lowest level all year on concerns of weakening demand from China.

Sluggish growth in China, the world's second-biggest oil consumer, has weighed on the oil market for months. Meanwhile, in the U.S., the world's biggest consumer, oil demand remains depressed as high unemployment continues to curb gasoline needs. Economists expect unemployment to hold steady at 8.1% when the Labor Department reports its closely watched October nonfarm payrolls report.

Other factors supported crude prices on Thursday. Turkey's parliament approved a measure giving the government powers to send soldiers into Syria after both sides traded fire over the last two days. The tensions are raising fears that Syria's civil war is spilling over into neighboring countries, further inflaming fears over Middle East supply disruptions.

"It's still going to be geopolitical concerns that help to cushion" oil prices, said Andy Lebow, senior vice president of energy futures at Jefferies Bache. "Today's, it's Turkey and Syria. Tomorrow, it could be Iran and Syria."

Meanwhile, prices were also supported by a weakening dollar, which slumped against the euro after the European Central Bank reaffirmed its pledge to buy the debt of troubled euro-zone states. A weaker dollar typically lifts oil prices by making the dollar-denominated commodity more attractive for holders of other currencies.

The euro was recently up 0.9% at $1.30185.

November heating oil settled 12.2 cents, or 4%, higher at $3.1884 a gallon.

More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

   Nymex Light Crude Oil Close 
   Nymex Harbor RBOB Gasoline Close 
   Nymex Heating Oil Close 
   ICE Brent Crude Oil Close 
   ICE Gas Oil Close 

-Rose Marton-Vitale and Emre Peker contributed to this story.

Write to Dan Strumpf at dan.strumpf@dowjones.com

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