Oil slips in Asia, as Saudi Arabia suspends operations in Yemen and as US stockpiles increase

On Wednesday crude-oil futures slid in Asian trade, undermined by expectations U.S. oil stockpiles will continue to rise and after Saudi Arabia suspended its air campaign in Yemen.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in June  traded at $55.83 a barrel, down $0.78, or 1.4%, in the Globex electronic session. June Brent crude  on London’s ICE Futures exchange fell $0.60 to $61.48 a barrel.

A day earlier, the American Petroleum Institute, an industry group, said that as of last week, its data showed a 5.5 million barrel increase in U.S. crude stockpiles.

The more closely eyed inventory figures from the U.S. Energy Information Administrations are due later Wednesday with analysts expecting the report to show that oil stockpiles rose by 2.8 million barrels.

Oil prices have been pressed down since the last trading session after the Saudi Arabian government ended its air campaign against Iran-backed Houthi rebels in Yemen on Tuesday.

“Market focus has remained squarely on the U.S., particularly on the likely timing of a downturn in U.S. crude oil output and inventories,” Paul Horsnell, head of commodities research at Standard Chartered said in a report.

In recent days, oil prices were supported by expectations that U.S. oil production may begin to slow in coming months, especially with the number of drilling rigs in the U.S. falling sharply. However, market observers say they have yet to see a meaningful slowdown in U.S. oil production or a drop in the record levels of oil stockpiles.

Oil flows and the conventional trade routes for oil and petroleum products have been transformed in recent years due to the U.S. shale revolution, and other major changes in the oil sector, Henrik Hartzell, managing director for Heidmar Far East, said at the Singapore Maritime Week.

Geopolitical events in the Middle East, Russia’s rising oil production and the likelihood of Iranian supply hitting the market could continue affecting oil trade in the coming months, Hartzell considers.

“We haven’t seen the last of the U.S. shale boom and its impact on oil markets,” Hor Weng Yew, chief executive for AET Tanker Holdings, said on the sidelines of the conference.