Oil trades mixed on high US supplies, Yemen unrest
West Texas Intermediate for June delivery fell 59 cents to close at $57.15 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for delivery in June, the global benchmark, settled at $65.28, up 43 cents.
On Thursday WTI had rallied $1.58 and Brent advanced $2.12.
“The global petroleum complex is rebalancing on book squaring ahead of the weekend, with traders tending to sell WTI crude oil as the US market has seen an ongoing accumulation of stock,” said Tim Evans of Citi Futures.
US crude inventories rose last week to 489 million barrels, a record for this time of year, while production fell slightly. Data released Friday by Baker Hughes showed the US oil rig count fell by 31 to 703 this week, down from 1,534 rigs a year ago.
Evans said that traders were rotating between the markets in an attempt to optimize profits on long positions, “but seem unwilling to consider that the overall market remains fundamentally weak, and vulnerable to broader price weakness.”
Phil Flynn of Price Futures Group said that the market was paying attention to geopolitical risk factors “as the bombing in Yemen continues.”
The Saudi Arabia-led coalition continued airstrikes against Iran-backed rebels in Yemen Friday. Meanwhile, US officials said that an Iranian naval convoy suspected of carrying weapons for Shiite rebels in Yemen had turned back. But, one of them said, it was possible the Iranians “could make a turn to Yemen at any time.”
The tensions “could mean a showdown that could make it dangerous to be short over the weekend,” said Flynn.
Yemen is not a major oil-producing country, but its coast forms one side of the Bab el-Mandeb Strait, the key strategic entry point into the Red Sea through which some 4.7 million barrels of oil pass each day on ships headed to or from the Suez Canal. (AFP)