Crude futures retrace after surging near 3% on Yemen attack

Front month Brent crude futures hit a 22-month high in trade with WTI futures hitting the highest since December 2019 on Monday after reports of attack at Saudi crude oil facilities over the weekend.

May Brent futures hit a high of $71.93 a barrel an hour after opening in Asia with WTI April hitting a peak of $67.94 a barrel, up almost 3%.

Although by 16.30 Singapore time, Brent futures had fallen back to $70 a barrel with WTI at $66.71 a barrel, up less than 1% on Friday's close as reports emerged that no loss of life or damage to property was recorded.

On Sunday Houthi forces in Yemen fired drones and missiles at oil assets including the Ras Tanura oil storage facility – Aramco's largest - and facilities in Dhahran – the latest salvo in the seven-year civil war.

The attack, however, may have stemmed a bigger fall in crude futures, which had rallied for three successive days after news that OPEC would not increase supply amid rising demand for crude as the world's economies recover from the coronavirus pandemic.

"We could see further upside in the market in the near-term, particularly as the market probably now needs to be pricing in some sort of risk premium, with these attacks picking up in frequency," ING analysts said in a report, noting that this was the second attack this month following an incident in Jeddah on March 4.