Oil prices fall as worries fade on Saudi supply reassurance

Oil prices dropped sharply on Tuesday after Saudi Arabia’s energy minister said the kingdom has fully restored its oil supply following an attack over the weekend that shut 5 percent of global oil output.

Stocks edged higher and US Treasury yields slipped ahead of an expected interest rate cut by the Federal Reserve at the conclusion of its two-day policy meeting on Wednesday.

The oil market remained on tenterhooks over the threat of retaliation for attacks on Saudi Arabian crude oil facilities on Saturday. During a news conference on Tuesday, Saudi Arabia’s energy minister said it will keep its full oil supply to its customers this month and will restore its lost oil output by the end of September.

Brent crude futures fell 0.64 percent to $64.14 a barrel while US West Texas Intermediate (WTI) crude lost 0.78 percent to $58.88 per barrel.

MSCI’s All-Country World Index, which tracks shares across 47 countries, was up 0.2 percent on the day.

On Wall Street, stocks finished modestly higher even as investors shunned big bets ahead of the Fed’s policy decision.

Investors are waiting for clues on how far US monetary policy easing may go, given that Fed policymakers are deeply divided on whether more rate cuts are warranted.

“It’s going to be difficult for them to signal an extremely dovish tone, given they are already half divided at this point,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in Charlotte, North Carolina.

The Dow Jones Industrial Average rose 33.77 points, or 0.12 percent, to end at 27,110.59, the S&P 500 gained 7.72 points, or 0.26 percent, to finish at 3,005.68, and the Nasdaq Composite added 32.47 points, or 0.4 percent, to close at 8,186.02.

With the retreat in oil prices, shares of energy companies, which had risen hard on Monday, gave up much of their gains.

European shares slipped slightly, although investors sought refuge in oil stocks and defensive sectors in response to heightened volatility after the attacks in Saudi Arabia. The pan-European STOXX 600 index closed down 0.05 percent.