Crude capped a second weekly gain after briefly spiking on the first armed strike by President Donald Trump’s administration.
Futures settled at the highest level in a month in both New York and London. Prices reached the highs early Friday as the market digested news of a U.S. cruise-missile strike against Syria. Russia’s deal with OPEC to cut crude supply hasn’t delivered as much as expected, according to Deputy Prime Minister Arkady Dvorkovich. OPEC ministers will gather in Vienna on May 25 to decide whether to extend the accord.
Oil had struggled for a month to extend a rally beyond $51 a barrel as concern over surging U.S. supplies countered optimism around a possible extension to production cuts led by the Organization of Petroleum Exporting Countries. The strike against Syria comes after accusations that Bashar al-Assad’s regime used poison gas to kill scores of civilians two days ago, drawing international condemnation. President Donald Trump called it “an affront to humanity.”
“The market’s focused not just on the direct implications of this missile attack but the wider risk to the region,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by telephone. “There’s been a flight to quality in other markets; the dollar’s up and so is gold. Oil isn’t alone in trying to evaluate what this will mean.”
West Texas Intermediate for May delivery advanced 54 cents, or 1 percent, to settle at $52.24 a barrel on the New York Mercantile Exchange. 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.
“The prospect of a deal extension is supporting the market,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “The speculators are hanging their hat on the May 25 meeting.”
See also: Why U.S. strike on source 0.04% of global output is lifting crude
Syrian output has slumped during the ongoing conflict. Production of petroleum and other liquids dropped to about 35,000 barrels a day in 2016, making it the 66th-biggest producer, according to the Energy Information Administration. The nation pumped an average 400,000 barrels a day of oil between 2008 and 2010.
U.S. active oil-rig count has more than doubled since May to 672 this week, according to Baker Hughes Inc.
PetroChina Co. said first-quarter earnings swung to a profit as China’s biggest oil and gas explorer benefited from higher crude prices and lower costs.