Arab Today, arab today crude falls below 125 saudi supply fears ease
Last Updated : GMT 09:34:52
Arab Today, arab today
Arab Today, arab today

Crude falls below $125, Saudi supply fears ease

Arab Today, arab today

Arab Today, arab today Crude falls below $125, Saudi supply fears ease

London - Arabstoday

London Crude oil futures yesterday slipped below $125 a barrel after surging 5 per cent to an 11-month high a day earlier, as fears of a supply disruption from Saudi Arabia eased, calming investors who now expect oil demand to fall in coming weeks. Oil prices soared on Thursday after an Iranian media report of a pipeline fire in top exporter Saudi Arabia, although prices later dipped back after CNBC cited a Saudi oil official saying the report was untrue. By 1321 GMT, front-month Brent crude was down by $1.31 to $124.89 a barrel, after settling the previous session at highs not seen since April 2011 of $126.20. Brent topped $128 a barrel in late post-settlement trade on Thursday, reaching levels last seen in July 2008, when oil hit a record of more than $147 a barrel. \"Most people believe the retracements to the downside are all going to be pretty limited in the short term,\" said Tony Machacek, an energy broker at Bache Commodities. Top oil exporter Saudi Arabia said yesterday there had been no attack in the kingdom, but traders are jittery about any potential disruptions to its production or infrastructure at a time of setbacks to global supplies. \"The general belief is that the market is going to remain relatively tight and relatively well supported: the underlying long term fundamentals remain good on demand from China and India. Throw into the mix a bit of geopolitical tension, and obviously Iran, and that\'s enough to keep people not wanting to go short into the weekend,\" Machacek said. US crude oil futures were down 77 cents to $108.07 a barrel, after settling $1.77 higher at $108.84. Markets have been on edge this year due to threats of supply disruptions from the West\'s standoff with Iran over its nuclear programme and production losses from South Sudan, Yemen, Syria and the North Sea. \"Even after the return of a tranche of Libyan output, the system is still highly exposed to relatively minor variations in output elsewhere,\" Barclays Capital analysts said in a note. \"Combine that lack of inventory cover with an upstream system that is running rather hot at more than 98 per cent of sustainable capacity, and the result is that supply-side fluctuations are felt faster and have larger impacts on physical differentials.\" Commerzbank\'s analyst Carsten Fritsch noted that despite the Saudi denial, a large portion of Thursday\'s price increase is still intact. \"Even if the original story came from Iran and no doubt was spread deliberately, the market clearly believes there to be an increased risk of supply shortfalls. This price reaction reveals how selectively market players are willing to take information on board — a typical feature of phases of exaggerated speculation,\" Fritsch said. Iran, Opec\'s second biggest producer, has been struggling to sell its crude in the face of tightening US sanctions and a European Union embargo that kicks in on July 1. This has threatened to tighten global crude supplies. However, US Energy Secretary Steven Chu said global oil producers have enough spare production capacity to make up for a drop in Iranian exports. Oil prices were also underpinned last week by positive manufacturing data out of China, easing fears of a sharp drop in demand from the world\'s second biggest oil consumer, and by a flood of cheap funds from the European Central Bank. The probability of a sharp global slowdown has eased due to recent policy measures adopted in the Eurozone to tackle its debt crisis, the International Monetary Fund said on Thursday, but it warned risks to world growth remain \"squarely to the downside\". From gulfnews

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Arab Today, arab today crude falls below 125 saudi supply fears ease Arab Today, arab today crude falls below 125 saudi supply fears ease

 



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