Oil Reaches High of One Month after U.S Missile Strikes
On Friday, oil prices reached a high of one month after the U.S. attacked a Syrian airbase that helped send shockwaves throughout global markets and increased concerns over the conflict spreading in the region rich in oil.
The toughest action yet by the U.S. in the six-year civil war in Syria ramped up the geopolitical uncertainty across the Middle East.
Gold, foreign exchange, oil U.S. and German 10-year bonds all had strong reactions to the U.S. air strikes.
Futures of Brent crude were 88 cents high to $55.77 per barrel early Friday in Europe after reaching a high intra-day of $56.08 per barrel shortly after the air strikes overnight were announced.
Futures for U.S. West Texas Intermediate or WTI were 85 cents higher to $52.55 per barrel after reaching a high intra-day of $52.94 per barrel.
An analyst in London said that the oil markets had returned to their bullish mode following a setback over the past few weeks. This news coming in said the analyst seems to bring into play geopolitical risks that have affected the price of crude during Friday trading.
Although Syria is limited in its oil production, its location as well as alliances with large producers of oil across the region mean that any slight escalation of their civil conflict has a potential to increase the fears over the supply of crude for the world market.
Another analyst in Germany was more cautious saying that the Syria conflict did not have any bearing on the fundamentals of oil.
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.
Oil markets continue to be oversupplied, even with the efforts by OPEC that have led to a cut production to prop prices up.
Russia, which entered into the deal with OPEC and other non-OPEC producers of oil in late 2016 to bring a stabilizing price to worldwide crude said Friday that it was still too early to say if a deal could receive an extension into the second six months of 2017.
The Energy Minister of Russia Alexander Novak said the government of Russia had held talks on a possible extension of the deal with its domestic oil producers.
Reaction to the U.S. missile strikes was brief as oil did increase but came off its highs. Investors are now wondering what will be U.S. President Donald Trump’s next move or was the strike the only move.