Syria missile strike bears no impact on oil market fundamentals; two Canadian oil sands producers cut output after fuel shortage.
Oil prices hit a one-month high on Friday after the United States fired
missiles at a Syrian government airbase, sending shockwaves through global markets and raising concerns that the conflict could spread in the oil-rich region.
The toughest U.S. action yet in Syria's six-year-old civil war has ramped up geopolitical uncertainty in the Middle East.
Oil, gold, foreign exchange and bonds reacted strongly to the attack but reversed some of the sharp moves later in the session.
Brent crude futures were up 38 cents at $55.27 a barrel at 1129 GMT after reaching an intraday peak of $56.08, the highest since March 7, shortly after the missile strike was announced.
U.S. West Texas Intermediate (WTI) crude futures were up 47 cents at $52.17 a barrel, having reached an intraday high of $52.94.
"Oil markets are back in bullish mode after the setback of the previous weeks. This news flow seems to bring geopolitical risks back on the radar," said Frank Klumpp, oil analyst at Landesbank Baden-Wuerttemberg, based in Stuttgart, Germany.
Although Syria has limited oil production, its location and alliances with big oil producers
in the region mean any escalation of the conflict has the potential to increase supply-side fears.
Oil pared some gains later in the session as concerns about an escalation faded. A U.S. defence official called the U.S. action a "one-off" event.
Other analysts said conflict in Syria had no bearing on oil fundamentals and the political risk premium could fall as quickly as it had appeared.
"This might just be a speculative move higher because there's nothing fundamental that's supporting this rise," said Hamza Khan, head of commodities strategy at ING.
Nevertheless, oil futures had been on the rise in previous session, with Friday's gains marking a five-day bull-run on Brent -- four days on WTI.
Traders eyed news from Canada, where two oil sands producers have cut production due to a shortage of synthetic crude following a plant fire.
"The production outages in Canada will ... continue to have a price-supportive effect," said Carsten Fritsch, commodities analyst at Commerzbank.
Russia, which is part of a deal between OPEC and non-OPEC oil producers struck late last year to rein in supplies, said on Friday it was too early to say whether a deal could be extended into the second half of the year.
The government has held discussions on a possible extension with domestic oil producers, Russian Energy Minister Alexander Novak said.
By Karolin Schaps