NEW YORK: Brent oil hit a 2015 high before settling down with U.S. crude on Monday as Saudi Arabia’s plan to halt bombing in Yemen eased tensions over the security of oil Middle East supplies.
A stronger dollar, following the largest U.S. factory orders in eight months, had also weighed on crude.
Even so, the price drop was cushioned by data from market intelligence firm Genscape showing a further tightening in supplies at the U.S. crude storage hub in Cushing, Oklahoma.
UK Brent crude LCOc1, the more widely used global oil benchmark, touched the year’s high of $67.10 before settling down just a penny at $66.45 a barrel.
A public holiday in Britain had limited trading volumes in Brent.
U.S. crude CLc1 settled down 22 cents at $58.93.
A Saudi-led Arab alliance, waging an air campaign against Houthi fighters in Yemen, was considering calling a truce to allow humanitarian relief, Saudi-owned al-Arabiya television quoted the country’s foreign minister as saying.
“The reducing of tensions in Yemen and the Middle East was certainly a negative to the geopolitics around oil today,” said Phil Flynn, analyst at the Price Futures Group in Chicago.
“But the Cushing draws have allowed retreating bulls to keep a foot in the market as those continue to play into the theme of tightening U.S. production.”
Genscape reported a drop of about 120,000 barrels in Cushing supply in the four days to April 28, said traders who saw the data.
After crude prices were halved from last summer’s highs above $100 on concerns over a global glut, the market sprang back last month, surging 20 percent to 25 percent on speculation the oversupply in U.S. crude may be starting to ease.
Oil services firm Baker Hughes Inc added to that notion on Friday by saying the number of U.S. rigs actively drilling for oil had fallen for a record 21 weeks in a row.
Still, a Reuters poll on Monday suggested commercial crude stockpiles had risen nearly 2 million barrels last week, building for a record 17th straight week.
Industry group American Petroleum Institute will issue on Tuesday its own expectations for last week’s stockpiles, before official data released by the government’s Energy Information Administration on Wednesday.
Middle East and North African oil output are also plentiful, with higher Libyan exports, record Iraqi shipment in April and OPEC output that is at its highest in 2-1/2 years.