Oil Prices Fluctuate Over Fears Of Western Air Strikes Against Syria

UK US France leaders urge response to Syria attack

UK US France leaders urge response to Syria attack

Brent crude prices were at $72.46 USA a barrel, up $1.42, or 2% from Tuesday's closing price, the highest level since December 2, 2014, when it hit $73.03.

Commerzbank's head of commodity research Eugen Weinberg said oil market fundamentals "do not justify the current price, but unfortunately the market is focusing more on the politics and ignoring some of the warning signs, especially the hike in USA oil production".

On Wednesday, reports that Saudi Arabia's air defenses intercepted a missile launched towards the country by Houthi rebels in Yemen further stoked geopolitical tensions and supported prices.

Oil managed a daily close above the year's high of $66.66 as tensions in Syria gave WTI a key boost to the upside in yesterday's trade.

The latest Middle East-related political risk factor is related to events in Syria, where a military confrontation may be brewing with the USA on the one side and Russia, Syria and Iran on the other. The Energy Information Administration will also release its monthly short-term energy outlook report Tuesday and weekly US petroleum-supply data Wednesday.

However, remarks from China's foreign ministry and a tweet from Trump have suggested that the dispute could easily heat up again.

Syria is not a significant oil producer, but any sign of conflict in the region triggers concern about crude flows across the wider Middle East. Reports of missiles in Riyadh exacerbated those worries, on top of existing concerns the United States could renew sanctions against Iran.

Oil markets remained tense Thursday on concerns of a military escalation in Syria, but prices were some way off Wednesday's 2014 highs as bulging American supplies weighed.

After more than a year, WTI is nearly close to our final target as it trades at $66.6 per barrel.

However, a production cuts pact between the OPEC, Russia and other producers has given strong tailwind to oil prices.

"Oil markets are getting a bounce on increasing speculation about Trump and Syria", Streible said.

OPEC, together with Russian Federation and a group of other producers, last November extended the output cuts to cover all of 2018.

Additionally, decreased demand from US Gulf Coast refineries amid spring turnaround season has left more volume available for the export market.

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