[LONDON] Oil traded near the highest price this year on concern that Saudi Arabia's military campaign in Yemen will disrupt Middle East supplies.
West Texas Intermediate crude for June delivery fell 4 cents to US$57.11 a barrel at 10.50 am on the New York Mercantile Exchange after reaching US$57.89 in intraday trading. Prices rose in the past six weeks and climbed to $57.74 on April 23, the highest settlement since December. The volume of all futures traded was about 28 percent below the 100-day average.
Brent for June settlement slid 60 cents to US$64.68 a barrel on the London-based ICE Futures Europe exchange. The European crude traded at a premium of US$7.57 to West Texas Intermediate, the US marker.
WTI gained as much as 1.3 per cent after Genscape Inc was said to report a drop in supplies at Cushing, Oklahoma, the delivery point for WTI futures, according to Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.
Oil also gained as US oil drillers reduced the number of active rigs for a 20th week last week to the fewest since October 2010."People are looking for evidence that the falling rig count is having an effect," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "We finally are starting to see that." Inventories at Cushing grew by 738,000 barrels in the week ended April 17, the smallest gain since February, according to the Energy Information Administration.
The global oil market is in "excellent" condition, Prince Abdulaziz bin Salman, Saudi Arabia's deputy oil minister, said to reporters in the city of Khobar. The world's largest crude exporter will meet any demand for its crude, he said.
Oil has advanced 21 per cent this month on speculation the falling rig count will reduce US production and on the situation in Yemen. Signs of a global supply glut persist, with US inventories having surged to the highest level in 85 years.
"The market is concerned about what's going on in Yemen and about the falling rig count," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "Inventories are still rising, but the continued drop in the rig count may ease the glut."