Crude-oil futures turned lower early Friday, but were still on track for the best weekly performance since July last year, after days of being driven by fears of a military conflict in Syria.
A report from the International Energy Agency on Friday indicated that OPEC soon will have succeeded in reaching its target for reducing the global supply glut.
West Texas Intermediate oil for May delivery CLK8, +0.22% lost 17 cents, or 0.3%, to reach $66.90 a barrel. For the week, the U.S. oil benchmark was set for a rally of nearly 8%, which would mark its best weekly percentage performance since late July of last year.
Brent oil for June LCOM8, +0.26% was down 26 cents, or 0.4%, at $71.76 a barrel. For the week, in the international benchmark was up about 7%.
On Friday, the IEA indicated that global oil stockpiles are dwindling and approaching the five-year average the Organization of the Petroleum Exporting Countries is targeting.
“It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished,’ but if our outlook is accurate, it certainly looks very much like it,” the IEA said in its report.
The Vienna agreement refers to the group of OPEC and non-OPEC countries that in 2016 agreed to cut output in an effort to reduce a global supply glut that had dragged oil prices substantially lower. The IEA report echoes the monthly data from OPEC out on Wednesday, which showed the group’s output declined by 201,000 in March and that the supply surplus is evaporating.
The IEA also noted that the continuing U.S.-China trade spat could dent oil demand.
Market participants said crude futures have come under pressure amid fears that Russia may retaliate against the U.S. by imposing sanctions in response to sanctions levied against Moscow last week in response to what the U.S. said was attempts to subvert Western democracies, and malicious cyber activities.
“This news offset good news about the ratcheted down of trade tensions with China and the possibility the U.S. could be re-entering the [Trans-Pacific Partnership],” said Phil Flynn, senior market analyst at Price Futures Group, in a note.
The fear is that he sanctions from Russia could hurt demand and push prices lower, he explained.
More broadly, the stellar weekly performances for both WTI and Brent this week come geopolitical tensions have returned to the fore after a suspected chemical-weapons attack in Syria that killed civilians over the weekend. That matter is also complicated by Syria’s friendly ties with Russia, Iran and Turkey.
U.S. President Donald Trump on Wednesday warned Russia that he was ready to launch an imminent military attack on Syria, but toned down his rhetoric on Thursday.
“The specter of a possible U.S. military strike on Syria is still firmly on the table. This ensured oil bulls remained in good spirits as did a barrage of positive comments from OPEC officials. The group’s secretary-general struck all the right bullish notes after bringing forward his estimates for a balanced market. A longstanding global oil glut is now expected to be vanquished by the end of the third quarter,” said Stephen Brennock, oil analyst at PVM, in a note.
In other energy products, gasoline RBK8, -0.21% inched 0.5% lower to $2.04 a gallon, while May heating oil HOK8, -0.18% fell 0.6% at $2.071 a gallon. Natural gas NGK18, +2.08% rose 0.5% to $2.71 per million British thermal units.