Oil Pares Gains as Middle East Conflict Fears Ease

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Oil Pares Gains as Middle East Conflict Fears Ease

Crude oil pared its biggest weekly gains in more than four years after fears of the conflict in the Middle East, disrupting shipments ceased and the focus shifted to the likelihood of a potential Iranian Nuclear deal next week.

Goldman Sachs in a note to investors said that the air strikes on Muslim Rebels seeking to topple Yemen’s president by Saudi Arabia and its allies will; have very little effect on the global supplies.

It added that Yemen is only a small exporter and the traders can avoid passing its waters on their way to their ports of destination.

“Unrest in Yemen continues, but fears of an oil supply disruption in the area have eased somewhat,” Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark, told Bloomberg.

“The oil price increase has faded.”

Oil is still poised, however, on a second straight week of gains with the West Texas Intermediate crude, the US benchmark, headed for its best week in four years as the dollar continued its slide.

WTI oil for May delivery was down 60 cents or 1.2% to $50.83 a barrel on the New York Mercantile Exchange to trade back part of its 4.5% gain on Thursday.

Brent oil for May delivery, the global benchmark, shed $1.17 or 2% to $58.03 on the London-based ICE futures exchange.

Both indexes recorded notable gains on Thursday on concern that the commencement of airs strikes on Yemen by Saudi Arabia and its allies would disrupt the key Bab-El-Mandeb-Strait- an important maritime oil transit route.

Analysts however said that this gain was an overreaction and instead shifted focus on the possible reopening of the Strait of Hormuz after progress between the US and Iran on an agreement that would Cap the country’s nuclear ambitions and lift economic sanctions was reported.

“For the weekend, we want to be positioned for the possibility of the Strait of Hormuz opening up rather than for the possibility of the Bab el-Mandeb shutting down,” research firm Petromatrix told the Wall Street Journal.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com