Crude oil up in futures trade on overseas cues
- Author: Zachary Reyes Apr 10, 2017,
Apr 10, 2017, 22:10
"We are expecting a moderate risk-off episode in markets in the next few days, until the level of commitment of the United States in the conflict becomes clearer", said Francisco Quintana Head of Strategy at Foresight Advisors.
The toughest USA action yet in Syria's six-year-old civil war has heightened geopolitical uncertainty in the Middle East. "There's a lot going on here: Syria and talks with China".
"Syria isn't a large oil producer, but is located close to large oil-producing countries and hence, fears exist that unrest spreads to the neighboring countries causing supply disruptions", said Michael Poulsen, oil risk manager at Copenhagen-based Global Risk Management.
Larry noted that many in the market also believe Venezuela could be producing below reported levels.
Oil, gold, foreign exchange, German and USA 10-year bonds, all reacted strongly to the air strikes. After the attack, global benchmark Brent crude jumped 2% to $56.08, its highest level since March 7, while U.S. West Texas Intermediate crude, which is the domestic marker for oil, also rose 2%, peaking at $52.94. USA drillers targeting crude added 10 rigs to 672 last week, according to data Friday from Baker Hughes Inc.
Although Syria has limited oil production, but its location in the Middle East and alliances with big oil producers raised worries about spreading conflict that could disrupt crude shipments.
Brent crude after rising more than $1 (Dh3.67) per barrel, closed 0.64 per cent higher at $55.24 per barrel. Prices are up about 4.6 percent this week.
With oil prices firming up on strong demand and and increased uncertainty in Syria following the United States bombings, crude prices are expected to touch $60 a barrel levels in the coming months an analyst said on Monday. This news coming in said the analyst seems to bring into play geopolitical risks that have affected the price of crude during Friday trading.
USA economic data pressured prices, and some analysts said the conflict in Syria had no bearing on oil market fundamentals.
The analyst said that it could be speculative moves pushing the prices higher because there is nothing that is fundamental supporting this type of rise we are seeing today.
"It means that at least one potential source of additional supply has fallen away for the time being", Carsten Fritsch of Commerzbank told Reuters, referring to the Libya stoppage.
Still, "the Opec cuts are preventing oil from sinking to $45".
Refineries processed 16.4 million barrels a day of crude in the week ended March 31, up 203,000 barrels from the prior week and the highest since January, the EIA data show.