Oil Prices stabilize after early falls as Markets eye U.S. Storm, Saudi Strikes

Oil prices stabilized after early falls on Monday as a storm that could impact Gulf of Mexico operations supported U.S. crude and Saudi-led air strikes on Yemen’s capital pushed up international Brent contracts.

In the Middle East, warplanes from a Saudi-led coalition bombarded Yemen’s capital Sanaa overnight, a Reuters witness said, as the country’s warring factions prepared for talks due to start in Geneva on Monday.

In the United States, a large tropical disturbance in the southern Gulf of Mexico had a 70 percent chance of developing into a tropical cyclone in the next 48 hours, the U.S. National Hurricane Center said, potentially threatening oil output in the region and supporting prices.

As a result, front-month U.S. crude CLc1 recovered from a session low of $59.62 per barrel to $59.93 at 0701 GMT. Brent futures LCOc1 were at $63.91 a barrel, up from a Monday low of $63.32 a barrel.

In Asia, a small-sized oil products tanker went missing off the coast of Malaysia close to Singapore over the weekend in what could be the second hijacking of such a vessel this month, maritime officials said on Monday, although traders said the vessels were too small to impact prices.

Despite the stabilizing prices, analysts said oil markets remained oversupplied.

“Fundamental data indicates that the oil market is oversupplied by over 2 million barrels per day,” U.S. investment bank Jefferies said on Monday. It added, however, that due to a recent rally in prices it had lifted its average 2015 Brent and WTI price forecasts to $60 and $55.10 per barrel, respectively, up from earlier forecasts of $52.50 and $48.60 a barrel.

“Oil prices remain under pressure as the hype of strong seasonal demand comes to an end and markets refocus on bearish supply-side fundamentals,” ANZ bank said.

Source: Reuters