Crude retreats as supply worries ease

Oil prices crept lower on Friday, as it seemed unlikely that supply would be disrupted in the Middle East

Reports of air strikes in Yemen on Thursday sent crude prices soaring. Oil jumped around five per cent on the news and recorded its largest daily gain in a month.

The price of Brent crude oil rose to a two-and-a-half-week high on the escalating tensions, trading just below $60 per barrel, and WTI crude breached the $50 per barrel level before falling back.

Investors feared that the geopolitical tensions could spill over to disrupt world crude supplies, however, Friday saw these worries recede.

Oil prices declined around $1 per barrel on Friday, but looked set to rise nearly five per cent on the week, its largest weekly gain since early February.

Crude continues to be pressured by the global oversupply glut, which should also mitigate most impact from a disruption to output in Yemen.

Investors note oversupply could be increased further if Iran starts exporting, which would occur if a nuclear deal with Tehran is reached and Western sanctions are loosened.