Crude oil prices dip in quiet trade

Tokyo — Oil prices slipped on Friday in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane, falling US inventories and easing trade tension between Washington and Europe.

Brent futures were down 22c or 0.3% at $74.32 a barrel by 2.36am GMT, after gaining 0.8% on Thursday.

US West Texas Intermediate futures were 7c lower at $69.54, after posting a nearly 0.5% gain the previous session.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, noted trading volumes were about a quarter of the daily average with very little news to drive the market. “We are looking forward to the inventory numbers next week,” he said.

US President Donald Trump and European Commission president Jean-Claude Juncker struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers.

A trade war would probably hit demand for commodities including oil, which is used heavily in shipping, construction and other economic activity.

Meanwhile, Saudi Arabia said it was “temporarily halting” oil shipments through the Red Sea shipping lane of Bab-el-Mandeb after an attack by Yemen’s Iran-aligned Houthi movement.

Any move to block the Bab-el-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal and the Sumed crude pipeline that link the Red Sea and Mediterranean.

An estimated 4.8-million barrels a day of crude oil and refined products flowed through the Bab-el-Mandeb strait in 2016 towards Europe, the US and Asia, according to the US Energy Information Administration.

However, Saudi Arabia has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab-el-Mandeb’s closure.

Reuters