Oil on Track for Biggest Weekly Gain Since July

 

Oil prices slipped slightly on Friday but were still heading for their largest weekly gain since July after U.S. President Trump's comments about possible military action in Syria and reports of dwindling global oil stocks.

 

Erasing earlier gains, Brent crude was down 17 cents to $71.85 a barrel by 1139 GMT, barely denting weekly gains of about 7 percent, or around $4.50.

 

U.S. crude for May delivery fell 17 cents to $66.90, too little to derail the contract's path to a weekly jump of nearly 8 percent, or about $5.

 

"You have to put today's moves in the context of the last three days. There hasn't been any particular change today in terms of geopolitics or fundamental data," said Harry Tchilinguirian of BNP Paribas.

 

"We're now in a consolidation period."

 

Both oil benchmarks hit their highest since late 2014 on Wednesday after Trump warned that missiles "will be coming" in response to a suspected gas attack in Syria and after Saudi Arabia said it intercepted missiles over Riyadh.

 

Trump tweeted on Thursday that an attack on Syria "could be very soon or not so soon at all", raising the prospect that an attack might not be as imminent as he seemed to suggest the previous day.

 

"As we start the last day of the week, we feel that the geopolitical risks are not as high as feared three days ago," Petromatrix said in a note.

 

"The Syrian escalation risk cannot be fully written off, but we view that it deserves less of a premium than three days ago."

 

A global oil stocks surplus is close to evaporating, OPEC said on Thursday, adding that its collective output fell to 31.96 million barrels per day (bpd) in March, down 201,000 bpd from February.

 

Vienna-based OPEC and its oil producer allies are poised to extend their supply reduction pact into 2019 even as the global glut of crude looks set to be eradicated by September, OPEC Secretary-General Mohammad Barkindo told Reuters.

 

The International Energy Agency (IEA), which coordinates the energy policies of industrialised nations, signalled on Friday that markets could become too tight if supply remains restrained.

 

"It is not for us to declare on behalf of the Vienna agreement countries that it is 'mission accomplished', but if our outlook is accurate, it certainly looks very much like it," the IEA said.