Monday, 30 March 2015 17:45
LONDON: Oil sank Monday as an oversupplied market offset concerns over unrest in the crude-rich Middle East, where Saudi-led warplanes have struck rebel targets in Yemen.
Brent North Sea crude for delivery in May slid $ 1.04 to $ 55.39 a barrel in London afternoon deals.
US benchmark West Texas Intermediate (WTI) for May shed $ 1.10 to $ 47.77 a barrel.
“Crude oil prices remain under pressure,” said Myrto Sokou, senior energy analyst at the Sucden Financial brokerage in London.
“The ongoing tensions in the Middle East have failed to provide signs of support in the oil market as bearish crude oil fundamentals continue to weigh heavily on market sentiment.”
Oil has collapsed by as much as 60 percent in value since June on the back of a burgeoning supply glut.
Jets bombed Yemen’s main international airport and a renegade troop base in the capital Sanaa Sunday.
The raids came just hours after United Nations workers were evacuated following deadly fighting that has sent tensions soaring between Iran, which backs the rebels, and other Middle East powers.
India and Pakistan also moved to airlift their citizens from the country.
“There is a big fear that the deteriorating conflict in Yemen could see a disruptional flow in the supply of oil in the gulf region,” Nicholas Teo, market analyst at CMC Markets in Singapore, told AFP.
“At the moment the price of oil is falling, but there could be a reversal in trend if the situation persists,” Teo added.
Yemen is a small oil producer that sits along the Bab al-Mandab Strait, through which about 3.8 million barrels of oil per day are transported.
The country has been gripped by turmoil since the Shiite rebels launched a power takeover in Sanaa in February.
Singapore-based Phillip Futures said in a commentary that Yemen is “an international shipping chokepoint and thus, we are concerned over trade disruptions in the region”.
“Seeing as the rebels have yet to react to the airstrikes, the conflict could go either way,” it said.
It said the main focus this week will be the US non-farm payrolls data Friday, with dealers seeking clues on whether the US economy is healthy enough for the Federal Reserve to hike interest rates later in the year as scheduled.
Copyright Reuters, 2015
