Oil edges down as market downplays U.S.-Iran missile test dispute

Thu Feb 2, 2017 7:51pm EST
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By Scott DiSavino

NEW YORK (Reuters) - Oil prices edged lower on Thursday, giving back early gains as traders grew less concerned about tensions between the United States and Iran.

U.S. President Donald Trump said on Thursday in a tweet that Iran had been "put on notice" after the country tested a ballistic missile.

In morning trade, crude prices briefly climbed to their highest levels since early January due in part to the tough talk over the missile test since the possibility of a confrontation in the Gulf region could put world oil supplies at risk.

"Once it did not seem like a conflict was in the offing, prices leveled off," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.

Brent futures fell 24 cents, or 0.4 percent, to settle at $56.56 a barrel, while U.S. West Texas Intermediate crude fell 34 cents, or 0.6 percent, to settle at $53.54.

U.S. gasoline futures fell 2.9 percent.

"The big action on Thursday was in the products market," said Andrew Lipow, president of Lipow Oil Associates in Houston, noting that U.S. gasoline inventories were within 1 percent of the record set a year ago.

Indications producers from the Organization of the Petroleum Exporting Countries (OPEC) and other exporters were following through on their agreements to cut output to reduce a global supply glut also boosted oil prices earlier.   Continued...

A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016.  REUTERS/Richard Carson