Oil drops as shipment disruption fears ease

(MENAFN- Arab News) Oil fell on Friday as fears about the disruption of Middle East crude shipments from Yemen's conflict eased, and focus turned to the likelihood of an Iranian nuclear deal by next week that could put more supply on the market.

But prices were still headed for a second straight week of gains, with US crude on track to its best week since 2011, reflecting the ground made by market bulls from six-year lows hit earlier this month.

Benchmark Brent oil and US crude were down more than 2 percent in New York's morning trade after reduced threats to the region's oil facilities and traffic from the air strikes in Yemen.

Brent was down $1.30 at $57.89 a barrel by 11:45 a.m. EDT (1545 GMT). US crude slid $1.40 to $50.03.

For the week, Brent was up more than 4 percent and US crude 9 percent higher, after gains from earlier sessions when the dollar was weaker.

Tehran is keen to recover market share lost under the US-led sanctions that have restricted its crude exports to just 1 million barrels per day from 2.5 million bpd in 2012.

Oil had jumped around 5 percent on Thursday on fear the conflict in Yemen could disrupt cargoes on the neighboring Bab el-Mandeb Strait, where 3.8 million bpd of crude and oil products flow.

But influential Wall Street bank Goldman Sachs said Yemen was only a small crude exporter, and oil tankers could avoid passing its waters to reach their ports of destination.

Meanwhile, Wall Street and European stocks edged ahead on Friday but remained en route to a losing week as US Treasury debt yields declined on government data indicating US economic growth was slowing.

Trading in many markets was choppy, with oil dropping back after Thursday's spike on air attacks in Yemen.

In currency markets, the dollar was mixed as the euro slipped against the dollar to below $1.09, according to Thomson Reuters.

Wall Street's key indices were ahead after the US Commerce Department reported US gross domestic product expanded at a 2.2 percent annual rate in the fourth quarter and after-tax corporate profits had their biggest drop since early 2011. The economy grew at a 5 percent rate in the third quarter.

The Dow Jones Industrial Average was last up 31.03 points, or 0.18 percent, to 17,709.26, the S&P 500 was ahead 4.82 points, or 0.23 percent, to 2,060.97 and the Nasdaq Composite added 20.05 points, or 0.41 percent, to 4,883.41.

European shares were heading for their biggest weekly fall of the year but were ahead for the day.

The pan European FTSEurofirst 300 of top companies was last up 0.40 percent. For the week the FTSEurofirst 300 was down 1.7 percent, its worst run since mid-December but only a dent in its 18 percent gains for the past three months.

Asian shares dropped overnight.

In New York, Treasury yields fell on the GDP data, which reinforced opinions and forecasts that the Fed would push back the launch of its first interest rate hike since 2006. Benchmark 10-year notes were last up 12/32 in price to yield 1.97 percent, down from 2.00 percent late on Thursday.