Crude oil prices advanced more than 1% on Thursday in reaction to renewed airstrikes in Yemen.
The resumption of strikes by a Saudi-led coalition have heightened concerns of potential disruptions to international oil shipping routes.
Additional risk premiums in the oil market have overshadowed the otherwise negative impact of weekly US crude inventory statistics which increased by more than the market had anticipated.
Department of Energy figures for last week showed a 5.3mln rise in the US’s record surplus. Oil market analysts had expected a 2.9mln increase. The crude stockpile now stands at 489mln barrels.
In London trading Brent Crude was up nearly 2% at US$63.90 while West Texas Intermediary futures gained about 1% to US$56.70.
City firm Investec today said that the long term energy market fundamentals remain in place and the industry is adjusting gradually.
Oil majors are now striving to rebalance their books, and are determined to maintain their dividends, the broker added. As a result the market for oil field services will take longer to recover.
“While the market will anticipate any cyclical upturn, we believe this will be a slow, grinding recovery with cost deflation likely to last into 2016,” Investec analyst Neill Morton said in a note.
Talking specifically about the oil services sector, Morton added: “Valuations, in our view, don’t look compelling for the most part.”