Crude oil futures pulled back Monday in European trading, as fears eased that strikes in Syria by the US, UK and France over the weekend would immediately lead to a direct confrontation with Russia.
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At 1100 GMT, June ICE Brent crude futures were trading at $71.81/b, down 77 cents from Friday's settlement, and the NYMEX May WTI contract was down 69 cents at $66.70/b, though both contracts were strengthening steadily throughout the morning. The US dollar was down 0.3% on the day.
"The market is breathing a bit of a sigh of relief, in the sense that there is no escalation," said Harry Tchilinguirian, an analyst at BNP Paribas in London.
A joint attack overnight Friday by the US, UK and France on suspected Syrian chemical weapons facilities was more limited than had been expected.
US Defense Secretary Jim Mattis said in a briefing after the attack that the US had no additional attacks planned, with US President Donald Trump tweeting that the attack was "mission accomplished."
While Russian President Vladimir Putin condemned the attack, the initial response from Russia was more muted than anticipated.
"Oil prices are having a change of heart as the new week gets under way," said Stephen Brennock, an analyst at PVM in a morning note. "Nevertheless, as much as the geopolitical risk premium may be taking a breather, oil prices will continue to be subjected to Trump's whims for the foreseeable future."
Further tensions in the Middle East would not only endanger supplies of crude, but are expected to provoke further sanctions on Russia. On Sunday, the US Ambassador to the UN, Nikki Haley, announced that further sanctions on Russia could come as early as Monday.
The rapid escalation of tensions between Russia and the US in Syria was one part of a bullish situation that last week helped push crude to a series of fresh three-year highs.
Those jitters came alongside long-running tensions over the future of the Iranian sanctions deal, and rapidly shrinking stocks of crude oil, with OPEC now expected to reach its production cut target of 1.8 million b/d as early as this month, according to bullish forecasts last week from OPEC and the International Energy Agency.
Even if concerns over Syria do ease, those factors are likely to keep some momentum in the oil market, said Tchilinguirian, with Trump facing a deadline on the future of Iranian sanctions on May 12.
"[This] does not mean as a result of this pull back oil is going to keep declining. The fundamentals remain extremely favorable," he said.
On Friday, Baker Hughes data for the previous week showed the number of active rigs in the US rose by seven to 815 in that week, the second consecutive weekly rise.