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Oil futures slip lower but remain near 4-month peak

Published 04/24/2015, 07:26 AM
© Reuters. Crude oil edges lower but holds close to 4-month highs on supply concerns
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Investing.com - Crude oil futures slipped lower on Friday, but remained with close distance of a four-month peak amid posible supply disruptions in the Middle East .

On the New York Mercantile Exchange, crude oil for June delivery hit $57.64 during European early afternoon hours, down 10 cents, or 0.18%. A day earlier, Nymex oil prices surged $1.58, or 2.81%, to end at $57.74.

Oil prices remained supported as Saudia Arabia resumed air strikes on Houthi-targets in the city of Aden on Wednesday despite increased calls from the White House for a diplomatic solution to the month-long conflict. Yemen is strategically located on one of the world's largest chokepoints of oil.

The Wall Street Journal reported on Thursday that an Iranian flotilla suspected of carrying weapons bound for rebels in Yemen reversed course and headed home, averting a potential confrontation in the Gulf of Aden.

Crude futures had mildly weakened after Wednesday's government report showed that U.S. crude oil stockpiles rose by 5.3 million barrels last week, compared to expectations for an increase of 2.8 million. Gasoline stockpiles dropped by 2.1 million barrels, exceeding expectations for a decline of 0.7 million.

U.S. oil futures have been well-supported in recent sessions due to mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months amid an ongoing collapse in rigs drilling for oil.

According to industry research group Baker Hughes (NYSE:NYSE:BHI), the number of rigs drilling for oil in the U.S. fell by 26 last week to 734, the lowest since 2010. It was the 19th straight week of declines.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for June delivery advanced 53 cents, or 0.82%, to trade at $65.38 a barrel. On Thursday, London-traded Brent futures rallied $2.12, or 3.38%, to settle at $64.85.

The spread between the Brent and the WTI crude contracts stood at $7.74 a barrel.

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