Crude has surged about 35 percent since reaching its 2017
Crude succumbed to pessimism in financial markets around the world, denting oil’s longest stretch of weekly rallies in more than a year.
The arrests of Saudi Arabian royals and investors in an anti-corruption sweep compounded tensions between the world’s largest oil exporter and longtime rival Iran, sending prices to their highest in more than two years.
But those gains were eroded Friday as the futures fell 0.8 percent in New York in the face of a global selloff of stocks and bonds.
“We’re waiting to see what’s going to happen over the weekend with the Saudi Arabian situation,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “The outside market worries seem to be pushing us down.”
Crude has surged about 35 percent since reaching its 2017 nadir in late June amid signs that global supplies have tightened. At the end of this month, the Organization of Petroleum Exporting Countries is expected to extend output curbs beyond their March expiration to further erode the oversupply that triggered the 3 1/2-year market rout.
Earlier this week, the Saudi kingdom advised its nationals to leave Lebanon, fueling fears of a confrontation with Iran in a country long known for being a battleground for proxy wars.
“All of the goings on in the Middle East, especially circling around Saudi Arabia and the Saudi-Iran political conflict, have made people very nervous,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.
West Texas Intermediate for December delivery slid 43 cents to settle at $56.74 a barrel on the New York Mercantile Exchange, capping the weekly advance at 2 percent. It was the longest streak of weekly gains since October 2016. Total volume traded was about 14 percent below the 100-day average.
Brent for January settlement dropped 41 cents to end the session at $63.52 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $6.54 to January WTI.
Mideast tensions eclipsed a surprise surge in U.S. supplies. American crude production jumped to 9.62 million barrels a day last week, according to data from the Energy Information Administration. Stockpiles in the world’s largest economy unexpectedly increased last week as well.
U.S. shale drillers boosted the oil rig count by 9 to 738 rigs, according to Baker Hughes data Friday. That’s the highest level in four weeks.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.