LONDON – Oil prices repaired early losses to rally above $64 on Friday due to the conflict in Yemen.
Brent crude was within sight of its 2015 high reached on Thursday and has rallied 16 percent in April, supported by Yemen and the prospect that lower prices are starting to curb U.S. shale output.
At 1509 GMT, Brent crude for June was up 25 cents at $64.23 a barrel. It hit a 2015 high of $64.95 on Thursday. U.S. crude for May was down 9 cents at $56.62 a barrel.
Military units protecting Yemen’s Masila oilfields, the country’s largest, withdrew on Friday and handed over security responsibilities to armed local tribes, in a sign of the weakening grip of the Yemeni state over its land and resources.
While Yemen is not a major oil producer, the conflict raises concern about risks to supply from major exporters in the region such as its neighbor Saudi Arabia.
Prices also drew support from traders closing out short positions on Friday, encouraged by strong technical factors said Rob Montefusco, senior oil trader at Sucden Financial.
“Technically, Brent is looking in better shape at the moment,” he said.
“$65 a barrel is the next target we need to break for upward momentum.”
Crude also got a lift from signs this week the price drop is starting to slow U.S. production and from a smaller-than-expected rise in U.S. crude inventories that raised hopes months of rising stocks may be nearing an end.
Oil prices have almost halved since June 2014 on ample supplies. The drop deepened after OPEC refused in November to cut its production and instead chose to defend market share against higher-cost producers such as the United States.
Pressuring prices on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that its March production jumped 810,000 barrels per day (bpd) to 30.79 million bpd, led by Saudi Arabia.
A day earlier, the International Energy Agency, which advises industrialized countries, also reported a surge in OPEC production to 31 million bpd, which it said could delay a tightening in the global market.
“There is the prospect in the second quarter of an enormous 2.4 to 2.7 million bpd stockbuild if OPEC production continues at 31 million bpd,” said David Hufton of brokers PVM.
Talks between OPEC and other major producers triggered speculation about deals to cut production and supported oil prices on Wednesday, though most analysts said an agreement was unlikely.
(Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; Editing by William Hardy)
This article was from Reuters and was legally licensed through the NewsCred publisher network.