Oil extends losses as Saudis halt Yemen strikes

Global oil prices fell on Wednesday after a Saudi-led coalition declared an end to four weeks of air strikes in Yemen, and ahead of a key US supply report.

Brent North Sea crude for delivery in June delivery dropped 44 cents to $61.64  a barrel in London midday deals.

US benchmark West Texas Intermediate for June dipped 48 cents to $56.13 a barrel compared with Tuesday's close.

"Oil sagged after Saudi Arabia ended its military campaign in Yemen, easing tensions in the energy-rich Middle East," noted analyst David Papier at trading firm ETX Capital.

The market also fell Wednesday after the Saudi-led coalition halted a four-week air war in Yemen -- but ground fighting between Iran-backed rebels and government loyalists raged on in a blow to US-led calls for renewed peace talks.

The air strikes stopped at midnight (2100 GMT Tuesday) but residents of Yemen's battleground second city Aden and third city Taez reported no let-up in fighting between the rebels and supporters of exiled President Abedrabbo Mansour Hadi.

The coalition said its operations would now enter a political phase but left open the option of resuming the air raids if necessary.

Although Yemen is not a particularly important oil producer, market watchers have been worried about the impact of the turmoil on the oil-rich region, notably in Iran, which is suspected of supporting the rebellion.

Dealers were meanwhile sitting on the sidelines ahead of the release later Wednesday of the official US stockpiles report.

"We expect a positive build in the US oil inventories," said David Lennox, resource analyst at Fat Prophets in Sydney.

The Department of Energy is expected to report that supplies rose 3.2 million barrels in the week to April 17, according to a Bloomberg News survey of analysts.

Gains in US petroleum reserves typically indicates slack demand in the world's top crude consumer, pushing global prices down.

Total reserves in the US are currently at a 85-year-high, contributing to a global supply glut that was the main factor for the commodity's collapse of more than 50 percent between June and January.

"Oil traders are waiting for the (US) crude oil inventories, which may rise ... but the end to the military operation in Yemen will probably have a bigger impact on the price," noted analyst Nour Al-Hammoury at ADS Securities in Abu Dhabi.
Source: AFP