U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are drifting sideways-to-lower for a second day as prices continue to consolidate just slightly below a more than three-year high reached earlier in the week.
The short-term fundamentals continue to be supportive as bullish traders remain concerned over the escalating military activity in the Middle East and shrinking global oil inventories.
Earlier in the week, crude oil surged to the upside after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Trump warned of military action in Syria.
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.
Concerns over military strikes against Syria are expected to continue to underpin crude oil prices on Friday. This is because comments from President Trump and the White House seemed to indicate the U.S military could remain active in the area. This leaves open the possibility of another bombing raid over the week-end.
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.
Although Trump was expected to talk with French President Emmanuel Macron and British Prime Minister Theresa May, CNBC is 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.”
This article was originally posted on FX Empire
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