Oil prices fell marginally after posting gains for three consecutive days, even as markets received support from Saudi Arabia’s suspension of oil shipments through a shipping lane in the Red Sea.
Brent futures, the international benchmark for oil prices, decreased five cents to reach $74.49 per barrel, while US West Texas Intermediate (WTI) futures dropped five cents to trade at $69.56, Reuters reported.
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Brent is on course to register around a 2% weekly gain after three weekly losses, while WTI is set for a loss of 1.3% for the week, which represents the fourth week of declines.
Saudi Arabia has temporarily put on hold crude transport through the Bab al-Mandeb shipping lane, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, following an attack on two tankers.
The suspension of oil shipments is expected to hit oil shipments through Egypt’s Suez Canal and the SUMED crude pipeline that links the Red Sea and the Mediterranean.
BMI Research Asian oil and gas analyst Peter Lee said: “The fundamentals of the oil market haven’t really changed. We will have sporadic news coming out of the more volatile regions every now and again, but the market is still oversupplied.
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By GlobalData“The picture is getting a little better but it is not going to be until 2019 when we start to see more material signs of a deficit building in the market. We expect to see range-bound trading until the end of the year.”
However, Saudi Arabia’s Petroline pipeline, which mainly transports crude from fields in the east to Yanbu for export, is expected to make up for the closure of Bab al-Mandeb.
Prices have also received support from declining US crude stockpiles and easing trade tensions between the US and Europe.
Based on the EIA’s data, the US crude oil inventories fell for the week ending 20 July, to their lowest level since 2015.
