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U.S. West Texas Intermediate and international-benchmark Brent crude oil finished sharply higher last week, driven primarily by the possibility of on an escalation of military activity in the Middle East which could lead to a supply disruption.
June WTI crude oil settled at $67.33, up $5.23 or +8.42% and June Brent crude oil finished the week at $72.58, up $5.47 or +8.15%.
Concerns over military strikes against Syria underpinned crude oil prices throughout the week, fueled by comments from President. Trump met with his national security team on Thursday to discuss the situation in Syria, but did not make a final decision on whether or not to use military force, White House Press Secretary Sarah Sanders said.
“We are continuing to assess intelligence and are engaged in conversations with our partners and allies,” Sanders said in a release.
Trump spoke with French President Emmanuel Macron and British Prime Minister Theresa May on Thursday. At the same time, CNBC was reporting that the U.S. was considering striking eight potential targets. Those targets include two Syrian airfields, a research center and chemical weapons facility.
Earlier in the week, Trump broke protocol about a potential U.S. air strike against Syria by Tweeting, “Get ready Russia, because they will be coming, nice and new and ‘smart!’ You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it.”
Adding to the news driven rally was a report that Saudi Arabia said it had intercepted missiles over Riyadh.
In other news, the U.S. Energy Information Administration said U.S. crude inventories rose by 3.3 million barrels to 428.64 million barrels. Additionally, U.S. crude oil production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016. The rise in production means the U.S. now produces more crude than top exporter Saudi Arabia. Only Russia, at currently just under 11 million bpd, pumps out more.
In another bullish development on Thursday, OPEC said that a global oil stocks surplus is close to evaporating. The cartel supported its claim by saying it was based on healthy energy demand combined with its own supply cuts. Furthermore, it revised up its forecast for production from rivals who have benefited from higher oil prices.
Additionally, OPEC Secretary-General Mohammad Barkindo told Reuters in an interview that OPEC and its oil producer allies are poised to extend their supply-cutting pact into 2019 even as a global glut of crude is set to evaporate by September.
Forecast
Volatility is expected to remain at elevated levels and prices are likely to rise early this week after a US-led missile attack on a Syrian chemical weapons factory early Saturday local time.