Oil of 2015 High on Saudis’ Yemen Action

Oil of 2015 High on Saudis’ Yemen Action

Oil prices retreated after key Brent crude hit a 2015 high as Saudi Arabia’s plan to halt bombing in Yemen eased tensions over the security of supplies from the Middle East region. 

A surge in the dollar, following the largest U.S. factory orders in eight months, also weighed on crude.

Oil prices

Even so, the price drop was cushioned by data from market intelligence firm Genscape showing a further tightening in supplies at the U.S. crude storage hub in Cushing, Oklahoma. U.K. Brent crude, the more widely used global oil benchmark, was down 20 cents at $66.26 a barrel by 12:32 p.m. EDT (1632 GMT), after touching the year’s high of $67.10 earlier. A public holiday in Britain limited early trading volumes in Brent. U.S. crude, was 37 cents lower at $58.78. 

A Saudi-led Arab alliance, waging an air campaign against Houthi fighters in Yemen, was considering calling a truce to allow humanitarian relief, Saudi-owned al-Arabiya television quoted the country’s foreign minister as saying. “The reducing of tensions in Yemen and the Middle East was certainly a negative to the geopolitics around oil today,” said Phil Flynn, analyst at the Price Futures Group in Chicago. “But the Cushing draws have allowed retreating bulls to keep a foot in the market as those continue to play into the theme of tightening U.S. production.” 

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Genscape reported a drop of about 120,000 barrels in Cushing supply in the four days to April 28, said traders who saw the data. After crude prices were halved since last summer’s highs above $100 on concerns over a global supply glut, the market sprang back forcefully last month, surging 20 to 25 percent on signs that U.S. output was slowing. 

Oil services firm Baker Hughes Inc. added to that notion on Friday by saying the number of U.S. rigs actively drilling for oil had fallen for a record 21 weeks in a row. Middle East and North African output remains plentiful, with higher Libyan exports, record Iraqi shipment in April and OPEC output that is at its highest in 2-1/2 years. –Reuters