Oil prices slide on easing Middle East tensions

Oil prices fell Friday on some signs that stability could return to the Middle East.

Saudi Arabia and Yemen agreed a partial cease-fire Friday morning, according to a report from The Wall Street Journal. Iran’s release of the British tanker has eased tensions also sank oil prices.

US oil prices are down 1.8% at $55.42 a barrel, while Brent Crude, the international benchmark, is down 1.9% at $61.55 a barrel.

Comments Iranian President Hassan Rouhani reportedly made Friday about sanctions briefly sent oil prices even lower, but they recovered after the US State Department denied that it would drop sanctions on the country.

Two weeks ago, Saudi oil production facilities were attacked, which sent oil prices soaring the most in a decade. While the attack was claimed by Yemen’s Houthi rebels, various Western nations blamed Iran. Rouhani denied his country’s involvement in the attack at a press conference in New York City Friday morning, asking the accusers to show evidence.

A deceleration in China’s economy continues to weigh on oil prices too.

Nevertheless, “we could be near a key bottom for oil prices,” said Edward Moya, senior market analyst for Oanda, in a note, adding that tensions could always heighten again, which push prices higher at a moments notice.

“Iran is losing all of its European support and the next card they may play is strategist attacks on oil tankers or other key energy assets,” he said.

The stock market remains on track to open higher. Dow futures are some 50 points, or 0.2%, higher. Futures for the S&P 500 and the Nasdaq Composite are up 0.2% and 0.1%, respectively.

US stocks finished modestly lower on Thursday, while the market remained relatively agnostic towards the impeachment inquiry into President Donald Trump.

The US personal consumption expenditure index, which is the Federal Reserve’s preferred measure of inflation, matched expectations Friday. The core PCE index grew 1.8% August versus a year ago, in line with forecasts and close to the Fed’s 2% inflation target.

This supports the argument that no further interest rate cuts are necessary to meet the inflation target.

Personal income grew by 0.4% in August, also in line with expectations.

Durable goods orders looked less rosy, dropping 1% in August and undercutting expectations, reflecting a weakened manufacturing sector in the United States.

Later in the morning, the University of Michigan will report its consumer sentiment index for September. The sentiment measure found last month that more people are beginning to worry about the trade war, leading to the largest monthly drop since December 2012.