Oil prices rose on Monday after an air strike rocked a Syrian air base this past weekend. Prices were up despite investors’ concerns over a possible trade war between the US and China. Anadarko photo.
Oil prices up over 2 per cent Monday
Oil prices rose on Monday as investors weighed unrest in the Middle East against an intensifying trade dispute involving the United States and China.
Over the weekend, an air strike rocked a Syrian air base. Syria along with Russia have blamed Israel for the attack on the base near Homs. The air strike came after reports that President Bashar al-Assad’s forces used a poison gas attack against insurgents in the city of Douma, located in Eastern Ghouta.
Syrian state television reported the United States fired missiles at a Syrian government air base, but the Pentagon denied the report.
By 3:44 p.m. EDT, benchmark Brent was up $1.47 to $68.58/barrel and US WTI $1.28 to $63.34/barrel. The Canadian Crude Index was up over three percent, or $1.48 to $46.39.
On Friday, oil prices dropped over 2 per cent after US President Donald Trump threatened to impose new tariffs on China, boosting fears that the two largest economies in the world are at the outset of a trade war.
“This might be a bit of a technical rebound and otherwise, there is some attention being paid to the geopolitical noise around Syria and with the presidential tweets over the weekend,” Petromatrix strategist Olivier Jakob told Reuters.
“$63 was the anchor last week (for WTI futures) and right now it looks like we’re moving back into that range,” he said.
So far this year, oil prices are up almost 2 per cent due mostly to rising demand and the OPEC supply cut agreement. Participants in the cartel’s pact have reduced their combined production by 1.8 million barrels per day.
Phillip Futures, a Singapore-based global markets firm said “Oil prices have been susceptible to the brewing trade tensions between China and the U.S. … However, fundamental support levels have been demonstrated with OPEC’s suggestion on a production limit extension into 2019.”
According to Reuters, West Africa’s crude oil loadings destined for Asia are expected to hit a five-month low this month due to a backlog of carriers outside China. As well strong Brent prices hindered new bookings, according to a Reuters survey of shipping fixtures and traders on Friday.
Also on Friday, Baker Hughes reported the number of oil rigs in the United States was up by 11 in the week ending April 6. The total count now sits at 808, the highest since March 2015.
Also affecting oil prices is the discount between Brent and US WTI futures, which reached its highest level since mid-January. Analysts say this reflects investor caution over rising US crude output against OPEC cuts. OPEC crude is linked to the Brent price.
Brent now sits just under $5 higher than WTI, up from a $3 difference only one month ago.
“Institutional investors are taking these differences into account and positioning themselves accordingly with respect to the two oil types,” Commerzbank analysts said.
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