Oil slips as investors reassess Mideast risks

LONDON (Reuters): Oil prices yesterday surrendered some gains made over the previous days as investors reconsidered the likelihood of immediate supply disruptions in the Middle East after the United States killed a top Iranian military commander.

Brent crude was down 41 cents or 0.6% at $ 68.50 a barrel at 1122 GMT, while US West Texas Intermediate (WTI) crude was at $ 62.95, down 32 cents or 0.5%.

Prices surged during the previous two sessions, with Brent reaching its highest since September, while WTI rose to its strongest since April.

The gains followed fears of escalating conflict and potential Middle East supply disruptions after the 3 January drone strike in Baghdad that killed Qassem Soleimani, head of Iran’s elite Quds Force. Iran has vowed a harsh revenge.

Prices also fell despite higher compliance among the Organization of the Petroleum Exporting Countries (OPEC) on meeting production quota curbs aimed at reducing supply.

OPEC members pumped 29.50 million barrels per day (bpd) last month, down 50,000 bpd from November’s revised figure, according to a Reuters survey published on Monday.

US crude oil stockpiles likely dropped for a fourth week last week as exports ramped up, although refined products stocks were expected to have risen, a Reuters poll showed on Monday.

Six analysts estimated on average that crude stocks had fallen by 4.1 million barrels in the week to 3 January.

Even before Soleimani’s death, investors were increasing their bullish WTI holdings, with money managers raising their net long positions in the week to 31 December, the Commodity Futures Trading Commission said on Monday.