Brent falls below $70 after Saudi attack as inflation worries mount

LONDON (Reuters) – Oil prices fell on Monday after pushing above $70 a barrel for the first time since the start of the coronavirus crisis, with support from U.S. stimulus and an attack on Saudi Arabian oil sites countered by global inflation fears.

FILE PHOTO: A pump jack operates in the Permian Basin oil and natural gas production area near Odessa, Texas, U.S., February 10, 2019. REUTERS/Nick Oxford/

Brent, which initially surged to $71.38 a barrel, its highest since Jan. 8, 2020, slipped by 73 cents, or 1%, on the day to $68.63 by 1500 GMT. The benchmark is still hovering around its highest level in more than a year.

U.S. West Texas Intermediate (WTI) crude was down 63 cents, or 0.9%, at $65.46 after touching its highest since October 2018 at $67.98.

The U.S. Senate on Saturday passed President Joe Biden’s $1.9 trillion COVID-19 relief plan, lifting prospects for the economy and fuel demand that has been pummelled by the pandemic.

Adding support, Houthi forces in Yemen launched drones and fired missiles at Saudi Arabia, including a Saudi Aramco facility at Ras Tanura that is vital to petroleum exports. Riyadh said there were no casualties or loss of property.

“The spectacular oil price ascent deserves some cautious thinking … Our balances indicate that the market is already tight enough to achieve a balanced recovery,” said Rystad Energy oil markets analyst Louise Dickson.

“Looking ahead, higher crude prices at this stage of COVID-19 economic recovery could be premature.”

Global equities dipped on Monday as the U.S. stimulus package and a tech stock rally raised inflation jitters, partly fuelled by the rising oil price.

Crude prices have been buoyant since the Organization of the Petroleum Exporting Countries (OPEC), Russia and oil-producing allies, collectively known as OPEC+, agreed last week on broadly sticking with output cuts despite rising crude prices.

“There is little data to drive oil over the rest of the session, so sentiment is likely to remain a key force,” said OANDA market analyst Sophie Griffiths.

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