Brent crude oil was the biggest beneficiary from the intensified Yemen fighting after it rose by 43 cents a barrel on Wednesday while U.S. crude dropped 59 cents.
On Friday, oil prices diverged over concerns of the Middle East oil supplies and security. This came after the Saudi-led coalition intensified airstrikes on central and southern parts of the country in a bid to overpower the Houthi militia forces. Brent soared to a 4-1/2- month high on Friday as a result of intensified fighting in Yemen.
Interestingly, the tension in Yemen is providing support to Brent oil prices while U.S. crude oil prices are being pulled down over supply-demand concerns as a result of excessive stockpiles in the country. Added to this, a softer U.S. dollar (USD) has also formed a floor beneath declining U.S. crude prices while supporting Brent crude prices.
On Friday last week, Brent crude oil for delivery in June traded at $65.28 a barrel, up 43 cents. This comes after the commodity reaching a record high of $65.80 which we last saw on the 10th of December last year. This marked a 3% gain for the week as well as the third straight week of gains for Brent crude. Meanwhile, U.S. crude for delivery in June dropped 59 cents to trade at $57.15 a barrel after it closed on Thursday at a high of $58.41. Last week’s overall gain for U.S crude was 2.5% and it also marked the 6th straight week of gains for the commodity.
After a sell-off, driven by oil over supply, between June 2014 and January 2015, prices of oil seem to have finally stabilized in the last 3 months where they rose by 20% in April. However, Wall Street and oil producers are at loggerheads on whether the decline is over. The financial community has gone ahead and predicted the recovery to be quicker than anticipated. Meanwhile, on Friday, the average price forecast for Brent for 2015 was raised by Societe Generale to $59.54 a barrel, up $4.33 while they also increased U.S. crude to $53.62 a barrel, up $4.28.
MT4 Chart: Crude Brent Oil
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