Oil Prices Sink Amid Indications Syria Attack A One-Off
Investing.com - Crude prices started the week in negative territory on Monday, amid indications that weekend missile strikes against Syria by the United States, France and Britain may be a one-off event.
New York-traded West Texas Intermediate crude futures lost $1.01, or 1.5%, to $66.38 a barrel by 3:50AM ET (0750GMT). The U.S. benchmark touched its highest level since Dec. 2014 in the last session at $67.76.
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., sank $1.20, or roughly 1.7%, to $71.36 a barrel.
Both benchmarks last week saw their strongest weekly percentage performance since late July of last year, with WTI gaining about 8.6%, while Brent saw a weekly increase of 8.2%.
The United States, Britain, and France pounded Syria in a coordinated air strike on Friday night, in response to an alleged chemical weapons attack earlier this month believed to be carried out by forces aligned with the government of Syrian President Bashar Assad in Douma, a town that was held by Syrian rebels.
Suggesting that the military action would not be prolonged, President Donald Trump hailed the U.S.-led intervention in Syria as "perfectly executed" in a tweet on Saturday, adding that the military campaign to degrade the Assad regime's chemical weapons capability had accomplished its goals.
While Syria is not a significant oil producer itself, the wider Middle East is the world's most important crude exporter and tension in the region tends to put oil markets on edge.
Meanwhile, a rise in U.S. drilling for new production also dragged on prices.
U.S. drillers added seven oil rigs in the week to April 13, bringing the total count to 815, General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday.
That was the highest number since March 2015, underscoring worries about rising U.S. output.
Domestic oil production - driven by shale extraction - rose to an all-time high of 10.52 million bpd last week, the Energy Information Administration (EIA) said, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.
Analysts and traders have recently warned that booming U.S. shale oil production could potentially derail OPEC's effort to end a supply glut.
OPEC and other producers, including Russia, agreed to cut output by about 1.8 million barrels per day (bpd) in November last year to slash global inventories to the five year-average. The arrangement is set to expire at the end of 2018.
In the week ahead, oil traders will await fresh data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.
Comments from global oil producers for additional signals on whether they plan to extend their current production-cut agreement into next year will also remain on the forefront.
In other energy trading, gasoline futures shed 1.3% to $2.036 a gallon, while heating oil slumped 1.5% to $2.068 a gallon.
Natural gas futures inched up 0.7% to $2.753 per million British thermal units.
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