Oil prices slide as Middle East tensions ease
US crude oil inventories are likely to have fallen last week, and Saudi says it will work for oil market stability amid US-Iran tension
London — Oil prices slid towards $64 a barrel on Tuesday, extending four days of declines due to easing concerns about possible supply disruptions as a result of tensions in the Middle East.
Brent crude was down 11c, or 0.19%, at $64.08 a barrel by 9.16am GMT. US West Texas Intermediate (WTI) crude futures were down 22c or 0.4% at $57.86 a barrel. The benchmarks lost about 5% and 6%, respectively, last week.
The recent declines followed investors unwinding bullish positions taken after the killing of a senior Iranian general in a US air strike in Iraq on January 2 that sent oil prices to a four-month high, global oil strategist at BNP Paribas in London Harry Tchilinguirian said.
“As geopolitical tensions take a back seat for now, we may see more of the same in the short term,” Tchilinguirian told the Reuters Global Oil Forum.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said his country will work for oil market stability at a time of heightened US-Iranian tension. He also said it was too early to talk about whether oil cartel Opec and its allies (Opec+), would continue with production curbs set to expire in March.
Oil prices were supported ahead of the signing at the White House on Wednesday of a phase-one US-China trade deal, which marks a major step in ending a dispute that has cut global growth and dented demand for oil.
China has pledged to buy more than $50bn in energy supplies from the US over the next two years, according to a source briefed on a trade deal.
Still, with traders already pricing in the signing of the deal, there is more downside risk to prices, said Michael McCarthy, chief market strategist at CMC Markets. “Regardless whether the deal is signed, we might have a ‘buy the rumours, sell the fact’ scenario unfolding.”
Separately, US crude oil inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday. The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the US department of energy.
China’s crude oil imports in 2019 surged 9.5% from a year earlier, setting a record for a 17th straight year, as demand growth from refineries built last year propelled purchases by the world’s top importer, data showed.