Investing.com - The potential fallout from a U.S.-led military strike in Syria will likely be the main driver of sentiment in the oil market in the week ahead.
The United States, Britain, and France pounded Syria in a coordinated air strike on Friday night, in response to an alleged chemical weapons attack believed to be carried out by forces aligned with the government of Syrian President Bashar Assad in Douma, a town that was held by Syrian rebels.
President Donald Trump hailed the U.S.-led intervention in Syria as "perfectly executed" in a tweet on Saturday, adding that the military campaign to degrade the Assad regime's chemical weapons capability had accomplished its goals.
Trump's declaration came as Russia, which is backing Assad's government in the conflict, denounced the bombing campaign with undisguised contempt. Russian President Vladimir Putin called the intervention an "act of aggression," while Russia's ambassador to the U.S. warned of "consequences."
The dispute over Syria was the latest wedge between the West and Russia, which has been embroiled in multiple controversies with western governments.
Crude prices tallied their best weekly performance in eight months last week, driven by fears of a U.S.-led military conflict in Syria.
While Syria is not a significant oil producer itself, the wider Middle East is the world's most important crude exporter and tension in the region tends to put oil markets on edge.
New York-traded West Texas Intermediate crude futures rose 32 cents, or roughly 0.5%, on Friday to end at $67.39 a barrel by close of trade. The U.S. benchmark touched its highest level since Dec. 2014 earlier in the day.
Meanwhile, London-traded Brent crude futures, the benchmark for oil prices outside the U.S., tacked on 56 cents, or nearly 0.8%, to settle at $72.58 a barrel.
For the week, WTI gained about 8.6%, the strongest weekly percentage performance since late July of last year, while Brent saw a weekly increase of 8.2%.
Ongoing efforts by major global crude producers to reduce a supply glut and indications of a steady increase in U.S. output levels will also stay on the agenda.
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.
The International Energy Agency (IEA), which coordinates the energy policies of industrialized nations, signaled on Friday that markets could become too tight if supply remains restrained.
However, U.S. drillers added seven oil rigs in the week to April 13, bringing the total count to 815, General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday.
That was the highest number since March 2015, underscoring worries about rising U.S. output.
Indeed, domestic oil production - driven by shale extraction - rose to an all-time high of 10.52 million bpd last week, the Energy Information Administration (EIA) said, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.
In the week ahead, oil traders will await fresh data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.
Comments from global oil producers for additional signals on whether they plan to extend their current production-cut agreement into next year will also remain on the forefront.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The arrangement is set to expire at the end of 2018.
Ahead of the coming week, Investing.com has compiled a list of the main events likely to affect the oil market.
The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
The U.S. Energy Information Administration will release its weekly report on oil and gasoline stockpiles.
The U.S. government will publish a weekly report on natural gas supplies in storage.
Baker Hughes will release weekly data on the U.S. oil rig count.