Oil prices fall more than $1 as supply threat eases

Fri Mar 27, 2015 3:07am EDT
 
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By Henning Gloystein

SINGAPORE (Reuters) - Oil prices fell more than $1 on Friday after sharp gains the session before, as worries of a disruption to crude supplies due to Saudi Arabia-led air strikes in Yemen eased.

Goldman Sachs said in note that the strikes in Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters to reach their ports of destination.

Brent crude was down 95 cents at $58.24 a barrel at 2:36 a.m., after touching $58.17 earlier in the session. U.S. crude was down 98 cents at $50.45 a barrel, after dropping to a low of $50.25 earlier in the day.

While oil prices have fallen, they could end higher than at the start of this week.

Oil jumped around 5 percent on Thursday, the biggest daily gain in a month, as air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies.

The rally had been driven by worries over the possible impact on the Bab el-Mandeb strait, the closure of which could affect 3.8 million barrels a day of crude and product flows.

Yemen is a small producer, with an output of around 145,000 barrels per day in 2014.

"Now the market is questioning how sustainable the (impact of the) geopolitical event is on oil prices," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.   Continued...