Oil prices inched lower Friday, putting crude on track for its largest weekly drop since mid-July with traders anticipating plentiful supply moving forward.
U.S. crude fell 0.8% to $59.17 a barrel on the New York Mercantile Exchange Friday, heading for a roughly 6% weekly slide following comments from President Trump and Iran that seemed to ease tensions between the two sides. Earlier this month, a U.S.-ordered strike that killed a top Iranian military leader had stoked worries that supply disruptions in the Middle East could lead to shortages. Prices closed at their highest level since May on Monday.
But prices have fallen since Mr. Trump signaled no new U.S. military strikes Wednesday following an Iranian missile barrage on Iraqi bases housing American and allied military forces that resulted in no casualties.
Brent crude, the global gauge of oil prices, also declined Friday and was on track for a large weekly drop.
“While the start of the week was still dominated by concerns about the conflict between the U.S. and Iran escalating and possibly resulting in disruptions to oil shipments, this topic now appears to be considered closed,” Commerzbank analysts said in a note to clients.
Still, despite Mr. Trump’s claim that the U.S. doesn’t need oil from the region, analysts caution that roughly 20% of global supply passes through the Strait of Hormuz and the U.S. still imports sizable amounts of crude even as the world’s largest producer. If shipments in the Middle East are substantially disrupted, fuel prices around the world could rise and threaten the world economy.
There has been little evidence of such disruptions so far, though. Weekly U.S. inventory figures released earlier in the week showed domestic stockpiles rose unexpectedly and were at their five-year average levels during the week ended Jan. 3, a sign that there is plenty of crude available. Inventories in other developed nations have also remained well supplied.
Traders were looking ahead to next week’s reports from the Organization of the Petroleum Exporting Countries and International Energy Agency on the state of the oil market. OPEC and allies have deepened existing output cuts to support prices, and comments from cartel officials earlier in the week that they don’t expect major disruptions following the latest U.S.-Iran tensions also sent oil prices lower.
Elsewhere in commodities Friday, most-active gold futures swung between small gains and losses and were recently down 0.3% at $1,549 a troy ounce. Prices of the safe-haven metal have also fallen since hitting their highest level in nearly seven years earlier in the week on escalating geopolitical tensions.
They were muted after December hiring figures for U.S. employers were slightly weaker than expected but still showed the steady gains that have supported stocks and other risky investments in recent months.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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Oil Heads for Worst Week Since July as Iran Tensions Ease - Wall Street Journal
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