Oil down as Syria fears subside

Oil prices pulled back to start the week on Monday, as investors expected there would be no immediate military escalation in Syria following the weekend’s American-led strike.

The U.S., U.K. and France launched more than 100 missiles targeting Syrian government sites on Saturday in response to a suspected poison gas attack on April 7.

Suggesting that the military action would not be prolonged, President Donald Trump hailed the attack as “perfectly executed,” while adding that the military campaign to degrade the Assad regime’s chemical weapons capability had accomplished its goals.

New York-traded West Texas Intermediate crude futures lost 73, or roughly 1.1%, to $66.66 a barrel by 8:45AM ET (1245GMT). The U.S. benchmark touched its highest level since Dec. 2014 in the last session at $67.76.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., declined 72 cents, or about 1%, to $71.86 a barrel.

Both benchmarks last week saw their strongest weekly percentage performance since late July of last year, with WTI gaining about 8.6%, while Brent saw a weekly increase of 8.2%.

Meanwhile, a rise in U.S. drilling for new production also dragged on prices.

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.

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.

Analysts and traders have recently warned that booming U.S. shale oil production could potentially derail OPEC‘s effort to end a supply glut.

OPEC and other producers, including Russia, agreed to cut output by about 1.8 million barrels per day (bpd) in November last year to slash global inventories to the five year-average. The arrangement is set to expire at the end of 2018.

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 other energy trading, gasoline futures shed 0.9% to $2.045 a gallon, while heating oil slumped 0.8% to $2.084 a gallon.

Natural gas futures inched up 0.8% to $2.757 per million British thermal units.