Oil markets slip after 3 days of gains; U.S.-Europe trade tension eases

Brent futures were down 22 cents, or 0.3%, at $74.32 a barrel

  
Recent gains in oil prices have begun to reverse ahead of a key OPEC meeting planned for Friday, June 22, 2018. Image used for illustrative purposes.

Recent gains in oil prices have begun to reverse ahead of a key OPEC meeting planned for Friday, June 22, 2018. Image used for illustrative purposes.

Getty Images/David McNew

TOKYO - Oil prices slipped on Friday in quiet trading after three days of gains, but took support from Saudi Arabia halting crude transport through a key shipping lane, falling U.S. inventories and easing trade tensions between Washington and Europe.

Brent futures were down 22 cents, or 0.3 percent, at $74.32 a barrel by 0236 GMT, after gaining 0.8 percent on Thursday.

U.S. West Texas Intermediate futures were 7 cents lower, at $69.54, after posting a nearly 0.5-percent gain the previous session.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, noted trading volumes were about a quarter of the daily average with very little news to drive the market. "We are looking forward to the inventory numbers next week," he said.

U.S. President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU's executive body, struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers. urn:newsml:reuters.com:*:nL4N1UM2FR

A trade war would likely hit demand for commodities like oil, which is used heavily in shipping, construction and other economic activity.

Meanwhile, Saudi Arabia said it was "temporarily halting" oil shipments through the Red Sea shipping lane of Bab al-Mandeb after an attack by Yemen's Iran-aligned Houthi movement.

Any move to block the Bab al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt's Suez Canal and the SUMED crude pipeline that link the Red Sea and Mediterranean.

An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 towards Europe, the United States and Asia, according to the U.S. Energy Information Administration.

However, Saudi Arabia has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab al-Mandeb's closure.

 (Reporting by Aaron Sheldrick Editing by Joseph Radford and Kenneth Maxwell) ((aaron.sheldrick@thomsonreuters.com; 81-3-6441-1320; Reuters Messaging: aaron.sheldrick.thomsonreuters.com@reuters.net))

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