Oil prices turn mixed

[LONDON] World oil prices wobbled on Monday with losses limited as fighting in Yemen fuelled fears about a supply disruption in the Middle East, analysts said.

Brent North Sea crude for June delivery shed just 10 cents to US$65.18 a barrel in late afternoon London trade as light profit-taking set in.

US benchmark West Texas Intermediate for June meanwhile rose 29 cents to US$57.44 a barrel compared with Friday's close.

"Brent crude has settled somewhat today, following a strong week which saw the gains of the previous month extended," said IG analyst Joshua Mahony.

"It is likely that this recent strength will only last for so long and with oil likely to remain in high supply, it is likely that we will see consolidation reign once more in the near future."

Sucden analyst Myrto Sokou added the market "remained under pressure ... amid ongoing concerns over record high levels of crude oil inventories".

Brent had rallied sharply last week to hit 2015 peaks, as the latest Saudi-led air strikes on Yemen stoked supply tensions in the crude-rich Middle East region.

Oil prices will "continue to receive support as there seems to be no sign of abatement in the conflict in Yemen," noted energy analyst Sanjeev Gupta at business consultancy EY.

Daniel Ang, investment analyst at Singapore-based Phillip Futures, said the oil market remains "fragile," with "geopolitical tensions likely to play a key role on crude prices."

Saudi Arabia-led warplanes hit the rebel-held presidential palace in Yemen's capital Sanaa on Sunday, as fighting raged between Shiite Huthi rebels and fighters loyal to the exiled president, Abedrabbo Mansour Hadi.

The country has been gripped by turmoil since the Shiite rebels launched a power takeover in Sanaa in February.

Yemen is not a major oil-producing country, but its coast forms one side of the Bab el-Mandeb Strait, the key strategic entry point into the Red Sea through which some 4.7 million barrels of oil pass each day on ships headed to or from the Suez Canal.

Analysts said oil prices were supported also by data released Friday by Baker Hughes that showed the US oil rig count fell by 31 to 703 this week, and well down from 1,534 a year ago.

Dealers are hoping a slowdown in US output could alleviate a global crude oversupply, which led to a collapse in prices of more than 50 per cent between June and January.

Ang said US first-quarter gross domestic product figures to be released Wednesday as well as a two-day meeting of the Federal Reserve's key policy arm starting Tuesday would be in focus this week.

AFP