Oil Prices Hold Ground Despite Supply Disruptions

Oil prices fell on Friday but remained poised for an 8% weekly gain, despite concerns over supply disruptions in the Middle East. Brent crude futures settled at $104.61 a barrel, down $3.02, or 2.81%, while US West Texas Intermediate crude finished at $100.05 a barrel, down $2.43, or 2.37%. The declines came after both benchmarks hit their highest levels since mid-May during the session.

Traders were re-evaluating the risk of supply disruptions due to attacks on shipping routes in the region. Phil Flynn, senior analyst with the Price Futures Group, said 'The things that were causing the panic yesterday are easing today.' Giovanni Staunovo, UBS energy analyst, noted that some headlines about possible new talks in the Middle East were weighing moderately on oil prices.

Commerzbank raised its year-end Brent crude forecast to $85 a barrel from $75, while increasing its diesel forecast to $1,200 a ton from $950 and its jet fuel forecast to $1,230 a ton from $980. Saudi Arabia's crude supply fell by 2.3 million barrels per day in August, the lowest level in more than three decades, according to the International Energy Agency.

US diesel prices hit a record high as attacks along Middle East shipping routes stoked concerns about prolonged supply disruptions. The Strait of Hormuz, which handles about one-fifth of global daily oil and liquefied natural gas supplies, saw vessel transits fall to seven on Thursday from 11 the previous day.