Futures Movers: Oil prices drop after last week’s big gains, as Syria-risk fatigue sets in

Oil prices fell Monday, reversing a fraction of last week’s pop to a near 3 1/2-year high, as investors took weekend airstrikes on Syria in their stride.

May West Texas Intermediate crude CLK8, -1.13%  lost 58 cents, or 0.9%, to $66.81 a barrel. Last week, the U.S. oil benchmark rallied by roughly 8.6%, which was the strongest weekly performance by percentage since late July of last year.

June Brent LCOM8, -1.25% dropped 68 cents, or 0.9%, to $71.90 a barrel on ICE Futures Europe. The international benchmark rose 8.2% last week. Both the U.S. benchmark and crude last week tapped levels not see in more than three years.

A barrage of American, French and British missiles launched on Saturday destroyed much of Syria’s chemical-weapons capabilities, but left President Bashar al-Assad’s conventional military intact, according to U.S. Defense Department officials.

Oil prices climbed last week on fears of an escalation in tensions over Syria, which put Assad-supporter Russia in a war of words with the U.S., and in anticipation of military strikes.

The missile launch was made in response to a suspected chemical-weapon attack that killed civilians in Damascus, an incident that drew widespread condemnation. On Sunday, Syrian armed forces launched fresh strikes at rebels, as Assad’s regime attempted to show his regime’s strength remained intact.

Read: Trump felt misled, angry over expulsion of 60 Russian diplomats: report

Investors were taking profits on Monday, said Stephen Innes, senior trader with Oanda, on the expectation that neither Russia nor Iran, another Assad supporter, would retaliate to the strikes, which were limited to the chemical-weapons facilities.

“Nevertheless, Middle East tensions and geopolitical risk remain incredibly high suggesting the oil markets risk premiums will stay in check, as the global oil supplies remain vulnerable to any significant supply disruption,” said Innes in a note to clients.

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.

Baker Hughes BHGE, +1.37%  on Friday reported that the number of active domestic oil rigs edged up by seven this week. The figure, which offers a peek at U.S. oil activity, was up for a second straight week.

Among energy products, gasoline RBK8, -1.01%  fell 0.8% to $2.049 a gallon, while May heating oil HOK8, -1.02% shed 0.8% to $2.084 a gallon. Those contracts saw gains of 5.7% and 7.3%, respectively, last week.

May natural gas NGK18, +0.29%  rose 1 cent, or 0.3%, to $2.743 per million British thermal units, rising 1.3% last week.

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