Oil set for biggest weekly gain in nine months amid supply risks

Futures gained more than 8% this week in New York, buoyed by political tensions over Syria as U.S. President Donald Trump met with advisers to discuss punitive measures over an apparent chemicals weapons attack. OPEC and Russia can nearly declare “mission accomplished” as their production cuts have cleared almost all of a supply surplus, the International Energy Agency said.

Oil rose this week to the highest since late 2014 as the risk of conflict in Syria, as well as tensions between Saudi Arabia and Iranian-backed rebels in Yemen, raises concerns over supply security in the energy-rich region. Tensions in the Middle East are aggravating an already tight oil market, Goldman Sachs Group Inc. analysts including Jeffrey Currie said in a note.

“A long-standing global oil glut is now expected to be vanquished,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

West Texas Intermediate for May delivery rose as much as 69 cents to $67.76/bbl on the New York Mercantile Exchange, the highest since December 2014, and traded for $67.13 as of 1:36 p.m. in London. Total volume traded was about 24% above the 100-day average.

Brent for June settlement added 1 cent to $72.03/bbl on the London-based ICE Futures Europe exchange, set for a 7.2% weekly advance. The global benchmark crude traded at a $5.02 premium to June WTI.

Yuan-denominated futures for September delivery gained 0.4% to 426.1 yuan/bbl on the Shanghai International Energy Exchange.

As tensions heightened in the Middle East, Trump spoke with UK Prime Minister Theresa May, with the UK cabinet agreeing it was “ vital that the use of chemical weapons did not go unchallenged.” That signaled that May is prepared to join Trump and French President Emmanuel Macron if military strikes are launched against Syrian President Bashar al-Assad’s government.