Crude-oil futures started the week slightly higher in Asia, coming as Friday's price jump following the U.S. airstrike in Syria moderated some ahead of the weekend. Market Watch reports on political and economic consequences of the move in its article Oil prices edge up as geopolitics dominate
Geopolitics remain front and center, not just in the Middle East but in the Pacific as the U.S. Navy canceled planned port calls to Australia for the USS Carl Vinson carrier group. It will instead be sent toward the Korean Peninsula in the wake of recent missile tests by North Korea. "There is no doubt that oil is rising purely on geopolitical concerns," said Phin Ziebell, an economist at National Australia Bank, citing several bearish factors such as 12-straight weeks of rising U.S. oil-rig counts that should have brought oil prices lower had current tensions not existed. Instead, the U.S. benchmark has risen in eight of the past nine sessions through Friday. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May were recently up 11 cents at $52.35 a barrel in the Globex electronic session while June Brent crude on London's ICE Futures exchange added 7 cents from Friday's U.S. settlement to $55.31.
Prices rose some 3% last week, with only a small portion of the gains the result of the U.S. missile launch against Syria. While Syria is a marginal oil producer, the U.S. move has stoked concerns of possible retaliation from Iran and Russia -- which both have renewed their support to stand by President Bashar al-Assad's regime. "How this all maps out is anyone's guess," said Stuart Ive, a client manager at OM Financial.
"The rally will continue precisely because people don't know what is going to happen," said Mr. Ziebell.
A crude trader in Singapore noted his clients aren't placing orders aggressively--prices remain near 1-month highs--but have been expressing concerns of possible supply disruption. "Unless we see more conflicts, the Syria effect will just be a temporary one and the key still lies in OPEC," he added.
The Organization of the Petroleum Exporting Countries is due to announce at the end of May whether it will continue output reductions agreed to late last year in hopes of ending a several-year oil glut. Investors this week will be eyeing OPEC's monthly report on Tuesday to gauge the group's compliance to the cutback deal. The U.S. Energy Department will also publish its monthly short-term outlook on domestic oil industry while China, the world's second biggest crude buyer, will release March import figures on Thursday.
Nymex reformulated gasoline blendstock for May rose 0.1% to $1.7476 a gallon in recent trading while May diesel added 0.1% to $1.6297 and April ICE gasoil gained 0.3% to $489.25 a metric ton.
