Global oil prices extended declines Friday amid reports of a partial ceasefire between Saudi Arabia and Yemen, a move that could ease investors concerns over attacks on tankers and refining facilities in the Gulf region.
The Wall Street Journal reported Friday that Saudi officials are preparing to match, at least in part, last week's declaration of a unilateral cease-fire by Houthi rebels in Yemen, which has seen four years of deadly clashes with the Kingdom.
Crude prices were also pressured by comments from International Energy Agency executive director Fatih Birol, who told Reuters Friday that the group could lower its near-term demand forecasts if the global economy continues to weaken.
"With the immediate risk of retaliation and escalation fading after Saudi Arabia agreed to a partial ceasefire in Yemen, the $5 per barrel risk premium that the market attached to the price in the days following the attack continued to deflate," said Saxo Bank's chief commodity strategist Ole Hansen. "We see enough risks to supply on the horizon to think that a sustained return to $60 per barrel Brent and below is unlikely at this stage."
"A potential trade war escalation however could further damage the price as it would add pressure to an already weak growth outlook from China and India to Germany and the U.S.," he added.
Brent crude contracts for November delivery, which soared the most in more than three decades during the first trading session following drone attacks on the Abqaiq and Khurais facilities, were marked $1.46 lower from Thursday's New York close to trade at $61.28 per barrel.
WTI contracts for the same month, which are more tightly linked with U.S. gasoline prices, were last seen $1.21 lower from their Thursday close at $55.20 per barrel.