Oil prices hold steady as Yemen bombing continues
SINGAPORE – Oil prices held steady on Thursday as renewed fighting in Yemen countered worries over rising US crude inventories due to still-robust shale production.
Saudi-led coalition warplanes continued bombing Yemen on Wednesday despite an announcement by Riyadh a day earlier that it was ending its campaign of air strikes.
While Yemen is not among the biggest producers in the Middle East, others in the region ship crude bound for Europe along the Gulf of Aden on Yemen’s southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti.
Oil prices have risen as much as $10 this month due to concerns over potential supply disruption as well as signs of stronger global demand.
Brent crude for June delivery LCOc1 was down 2 cent at $62.71 a barrel by 12.06 a.m. EDT, after settling 65 cents higher.
US crude for June delivery CLc1 was trading 13 cents higher as $56.29 a barrel. The contract had closed 45 cents lower in the previous session.
The US benchmark was weighed on by Wednesday’s government data showing crude stockpiles rose 5.3 million barrels last week, higher than the 2.9-million-barrel build expected by analysts in a Reuters survey.
It was the 15th consecutive weekly build for crude stocks and pushed US commercial inventories to a record peak.
The US Energy Information Administration (EIA) also said that domestic oil production saw its third weekly decline last week in four.
But some experts said the weekly government data is misleading and that output probably hasn’t started falling yet, despite a lower number of rigs drilling for oil.
“We still see a fundamental excess of crude supplies persisting, at least for the next few months,” analysts at BNP Paribas said in a note, pointing to little prospect for significant increases in crude demand amid already high refinery run rates.
Executives at the CERA industry gathering in Houston said that with costs of fracking a shale well in the United States falling faster than expected, producers could keep working in oilfields that just months ago looked uncompetitive after the oil price crash. – Reuters