Oil prices fell on Friday as fears of a major disruption in the Middle East eased, after prices soared over the past week as top exporter Saudi Arabia detained hundreds of individuals in a corruption investigation.
U.S. crude for December delivery settled down 43 cents, or 0.8%, at $56.74 a barrel on the New York Mercantile Exchange -- its largest single day decline in three weeks. Brent, the global benchmark, fell 41 cents, or 0.6%, to $63.52 a barrel on ICE Futures Europe.
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Still, both benchmarks ended the week higher for the fifth consecutive week.
Political tumult in Saudi Arabia and a flare-up in tensions between the kingdom and Iran boosted prices this week, as traders and investors became concerned about volatility in the region. But as the week ended without major new developments, oil markets began to calm, said John Kilduff, founding partner at Again Capital.
"A lot of anxieties about Saudi Arabia have eased for now," Mr. Kilduff said. "Oil was bought up on very high fears about instability in the region that haven't come to fruition yet."
Saudi Arabia has detained 201 individuals including princes, businessmen and government officials after a three-year investigation estimated $100 billion of state funds had been embezzled. The actions helped push oil prices to more than two-year highs this week.
"If in such an important oil nation something happens which you didn't expect at all, you start to price in a risk premium," said Giovanni Staunovo, an analyst at UBS Wealth Management.
This follows a recent rise in geopolitical risks in other oil producers including Venezuela and Iraq, Mr. Staunovo said.
The U.S. oil rig count rose by nine in data released Friday, bolstering concerns that U.S. producers are taking advantage of the higher prices to drill more oil wells.
Some observers said oil's rally is likely to pick up steam again, buoyed by the volatile situation in Saudi Arabia, strong demand and shrinking inventories.
"We are still viewing this as a four-day pause in a strong bull market that is likely to be followed by fresh highs across the board within the next couple of sessions," Jim Ritterbusch, president of Ritterbusch Associates, wrote in a research note.
Analysts said that investors were already pricing in an extension to ongoing production cuts from major producers working in concert with the Organization of the Petroleum Exporting Countries.
The group is due to meet on Nov. 30 when members are expected to discuss a potential nine-month extension to cuts implemented from January to help drain the global glut of oil supply. The current deal is due to expire in March 2018.
"The market is still convinced that OPEC will succeed in tightening the market to a sufficient extent by extending its production cuts," said Commerzbank in a daily note.
Any outcome from the meeting which is less than a nine-month extension could trigger a downward correction in prices, analysts warned.
Gasoline futures fell 0.73 cent, or 0.4%, to $1.814 a gallon. Diesel futures fell 1.2 cents, or 0.6%, to $1.9349 a gallon.
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(END) Dow Jones Newswires
November 10, 2017 16:14 ET (21:14 GMT)