Oil prices set for strong week after Russia comments, US strike

Oil prices closed higher on April 7 for the second week in a row — and the coming seven days could be another good period of growth.
The reasons for this optimism are simple. First, the geopolitical risk premium is back as investors and speculators are becoming worried about future actions in Syria and the effect of that on the supply picture in the region.
Second, it is becoming very clear that the Organization of the Petroleum Exporting Countries’ (OPEC) agreement with other producers to curtail production is not bearing enough fruit, and therefore, it must be extended for a couple of months to let the market adjust itself and consume the excess crude stored in tanks and floating storage around the globe.
Third, OPEC and the International Energy Agency (IEA) will publish their monthly oil reports on Tuesday and Wednesday, respectively. Any indication from either of the two organizations that the market is improving or that producers’ compliance with the pledged cut will support oil prices.
Crude capped its second weekly gain after briefly spiking on the first missile strike against the Syrian regime by President Donald Trump’s administration.
Futures settled at the highest level in a month in both New York and London. West Texas Intermediate (WTI) for May delivery advanced 54 cents, or 1 percent, to settle at $52.24 a barrel on the New York Mercantile Exchange (NYMEX). It was the highest close since March 7. Prices rose 3.2 percent this week. Total volume traded was about 35 percent above the 100-day average.
Brent for June settlement rose 35 cents, or 0.6 percent, to $55.24 a barrel on the London-based ICE Futures Europe exchange. It was also the highest close since March 7. Prices increased 4.6 percent this week. The global benchmark crude ended the session at a $2.60 premium to June WTI.
As prices reached highs early Friday, as the market digested news of the US missile strike in Syria, the support might extend to this week. The Trump administration warned that it is ready to take further military action if the regime of Syrian President Bashar Assad wages another chemical attack, but gave no indication the US intended to intervene more broadly in Syria’s civil war after Thursday night’s missile strikes.
On the other hand, Russia says its deal with OPEC to cut crude supply has not delivered as much as expected, according to Deputy Prime Minister Arkady Dvorkovich. His comments on Friday raised the probabilities for an extension of the deal even as Russian Energy Minister Alexander Novak said that it is too early to decide on this. OPEC ministers will gather in Vienna on May 25 to decide whether to extend the accord or not.

Source: Arab News