Oil falls after Saudi pipeline fire rumour doused

Oil prices reversed course on Friday after Thursday's rumour of a Saudi pipeline fire sent crude soaring. After the Saudis, the world's largest exporters of crude, denied the rumours, prices sank in all major markets. New York's main contract, West Texas Intermediate crude for delivery in April, shed $2.14 to $106.70 per barrel, one day after hitting a nine-month high at $110.55.

In London, Brent North Sea for April dived $2.55 to $123.65 per barrel.

The Brent contract had surged on Thursday to $128.40 -- the highest level since July 23, 2008 - after an Iranian media report of a pipeline fire in Saudi Arabia.

"The jump in price was prompted by an Iranian media report of an oil pipeline explosion in Saudi Arabia," said Commerzbank analyst Carsten Fritsch.

"Even if the original story came from Iran and no doubt was spread deliberately, the market clearly believes there to be an increased risk of supply shortfalls," he added.

A slight pullback in saber-rattling over Iran from the US and Israel also helped prices ease.

AFP