The Investor SA

NYMEX crude oil down in Asia as investors keep eye on Yemen

 

30 March, 2015

by Investing.com 

 

Crude oil futures held weaker in early Asia on Monday as investors monitored events in Yemen and looked

ahead to U.S. jobs data later in the week.

On the New York Mercantile Exchange, crude oil for delivery in May fell 0.74% to $48.15 a barrel.

Last  week, crude  oil  futures plunged sharply on Friday to give back most of the previous session's gains,

as  fears  over  an  imminent  disruption  to supplies from the Middle East faded despite ongoing turmoil in

Yemen.

Elsewhere, on the  ICE  Futures  Exchange  in  London, Brent for May delivery dropped $2.78, or 4.7%, on

Friday to settle the week at $56.41 a barrel by close of trade.

Global  oil  prices  spiked by more than three dollars on Thursday after Saudi Arabia and a coalition of Gulf

region allies launched air strikes in Yemen to counter Iran-backed Houthi rebels besieging the southern city

of Aden.

Yemen  is  strategically located on the Bab el -Mandeb, a strait that connects the Gulf of Aden with the Red

Sea. Approximately 3.8 million barrel per day of crude and oil products flow through the strait.

Industry  research group Baker Hughes (NYSE:NYSE:BHI) said Friday that the number of rigs drilling for oil

in the U.S. fell by just 12 last week to 813.

Market  players  have  beenpaying close attention to the shrinking rig count in recent months for signs it will

eventually reduce the glut of crude flowing into the market.

However, total U.S. crude oil inventories stood at 466.7 million barrels as of last week,  the most in  at  least

80 years, indicating that cheap prices have yet to affect output.

The dollar showed little reaction after Federal Reserve Chair Janet Yellen struck a cautious note on interest

rates. In  a  speech, the  Fed  chief  said  a  rate  hike  may  be  warranted  later  this  year, but  added  that

weakening inflation pressures could force the Fed to delay.

The  speech  echoed  the  Fed’s  latest policy statement, released on March 18, which indicated that it may

raise interest rates more gradually than markets had expected.

Meanwhile,  the  Commerce  Department  reported  Friday  that  the  U.S.  economy  expanded  at  an  annual  rate  of  2.2%  in the fourth quarter, unchanged from the preliminary estimate and below economists’ forecasts for an upward revision to 2.4%.

Another  report showed that the final reading of the  University of Michigan’s consumer sentiment index ticked down to 93.0 this month from a final reading of 95.4 in February.

In the week ahead, investors will be turning their attention to  Friday’s  U.S. nonfarm  payrolls  report  for  further  indications  on the strength of the recovery in the labor market.

Oil traders will also continue to monitor developments surrounding talks between  Iran and world powers over  Tehran's  nuclear program. Any sign of a deal between Iran and world powers could result in a flood of Iranian crude returning to the market.

On Monday, the U.S. is to release reports on personal spending and pending home sales.