Crude headed for its second weekly gain after briefly spiking in reaction to the first military strike undertaken by President Donald Trump’s administration. Futures surged more than 2 percent to the highest in a month in early trading Friday after a U.S. cruise-missile strike against Syria. Gains eased after a weak jobs report fueled concern about the strength of the U.S. economy. 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 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 two days after Bashar al-Assad’s regime used poison gas to kill scores of civilians, drawing international condemnation while President Donald Trump called it “an affront to humanity.”
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“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 48 cents, or 0.9 percent, to $52.18 a barrel at 1:03 p.m. on the New York Mercantile Exchange. Prices rose as much as 2.4 percent to $52.94, the highest since March 7. Prices are up 3.1 percent this week. Total volume traded was about 40 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. Futures surged as much 2.2 percent to $56.08 earlier, also the highest level since March 7. Prices are up about 4.6 percent this week. The global benchmark crude traded at a $2.66 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.”
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.
China zoomed past Canada to become the biggest foreign destination for American crude in February, accounting for more than 8 million barrels of U.S. cargoes. Baker Hughes’ global rig count falls U.S. active oil-rig count has more than doubled since May to 672 this week, according to Baker Hughes Inc. Venezuela’s PDVSA has informed investors that all principal and interest payments related to its bond that matures this month will be paid on April 12, the company said in an emailed statement.