Oil headed for the biggest weekly advance since July as concern over possible disruption to supply lends weight to signs of a dwindling glut.
Futures gained more than 8 percent this week in New York, buoyed by political tensions over Syria as U.S. President Donald Trump met with advisers to discuss punitive measures over an apparent chemicals weapons attack. OPEC and Russia can nearly declare “mission accomplished” as their production cuts have cleared almost all of a supply surplus, the International Energy Agency said.
Oil rose this week to the highest since late 2014 as the risk of conflict in Syria, as well as tensions between Saudi Arabia and Iranian-backed rebels in Yemen, raise concerns over supply security in the energy-rich region. Tensions in the Middle East are aggravating an already tight oil market, Goldman Sachs Group Inc. analysts including Jeffrey Currie said in a note.
“A long-standing global oil glut is now expected to be vanquished,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate for May delivery rose as much as 69 cents to $67.76 a barrel on the New York Mercantile Exchange, the highest since December 2014, and traded for $67.39 as of 11:36 a.m. in London. Total volume traded was about 32 percent above the 100-day average.
Brent for June settlement added 30 cents to $72.32 a barrel on the London-based ICE Futures Europe exchange, set for a 7.3 percent weekly advance. The global benchmark crude traded at a $5.06 premium to June WTI.
Yuan-denominated futures for September delivery gained 0.4 percent to 426.1 yuan per barrel on the Shanghai International Energy Exchange.
As tensions heightened in the Middle East, Trump spoke with U.K. Prime Minister Theresa May, with the U.K. cabinet agreeing it was “vital that the use of chemical weapons did not go unchallenged.” That signaled that May is prepared to join Trump and French President Emmanuel Macron if military strikes are launched against Syrian President Bashar al-Assad’s government.
Other oil-market news:
- OPEC’s crude production fell to the lowest in almost three years as Venezuela’s woes continued to mount, the IEA said.
- The world’s need for OPEC crude in 2018 will exceed the group’s March production level by 600k b/d, the IEA said.
- The IEA still expects “a second wave of shale revolution” in the U.S., Fatih Birol, head of the IEA, said on Bloomberg TV.
- China’s crude imports in March increased more than 21 percent from the previous month to 9.26 million barrels a day, Bloomberg calculations based on customs data show.