Oil slipped towards $65 a barrel on Friday as the threat of war in the Middle East receded and investors focused on rising US inventories and other signs of ample supply.
Crude is now below where it was before a US drone strike killed Iran’s top general Qassem Soleimani on Jan. 3. Iran responded with a missile attack on Iraqi air bases hosting US forces this week that left no casualties, CNBC reported.
“Immediate escalation has been avoided,” said Olivier Jakob, oil analyst at Petromatrix. “There has been some de-escalation, but the return of risk is still there.”
Brent crude, the global benchmark, was down 20 cents at $65.17, and was heading for its first weekly decline in six weeks, down about 5%.
US West Texas Intermediate crude was 25 cents lower at $59.31.
“Tensions between the US and Iran appear to have eased almost as quickly as they escalated,” said Craig Erlam, an analyst at OANDA, a brokerage.
“Brent is trading back around $65 and is looking pretty stable at this point. Barring any further escalation in the Middle East, we could see oil prices stabilize around these levels in the near term.”
With Middle East tensions easing for now, investors are focusing on areas away from the conflict.
Crude inventories in the United States rose last week by 1.2 million barrels, the US Energy Information Administration said on Wednesday.