Crude prices off multi-week high on dollar strength but Yemen conflict continues to support

Crude oil eased from a multi-week high on Friday helped by the dollar strength and some profit taking but the conflict in Yemen continued to support prices.

Brent crude for spot delivery slipped to $57.72 from the previous close of $58.85 or down 1.9% on the day, before edging back up to $58.42 late morning in Europe.

The commodity had risen to as high as $59.72/barrel Thursday when concerns the Saudi air strike on Yemen will constrain oil supply intensified.

At Thursday's high, spot Brent was up 13.6% from the more than one-month low of $52.55 touched on 17 March.

The correction over the past ten days has brought the broad upward channel since mid-January back into focus. It was on 13 January the immediate delivery spot hit a six-year low of $45.16.

That upward channel had fetched a two-month high of $62.97 February before reversing most of that month's gains in the first half of this month.

The Yemeni militant groups connected to Iran were the target of Saudi Arabia and the world is concerned about the far-reaching effects of the escalation of the Saudi-Iran conflict.

Yemen's proximity to major sea routes increases the fear of supply disruptions while Chinese importers who buy oil from the war-stricken Gulf country have turned to markets elsewhere putting pressure on the commodity.

Thursday's better than expected US data and hawkish rhetoric by a senior Fed official aided a dollar rally helping ease the upward pressure on oil.

Initial jobless claims in the week to 20 March in the US was 282,000 less than 291,000 in the previous week and beating analysts' expectations of 290,000, data showed on Thursday.

In addition, the composite PMI measure by Markit rose to 58.5 for March from 57.2 in February while analysts had been expecting a drop to 57.0.

The Atlanta Federal Reserve president Dennis Lockart said on Thursday that the US economy is in strong enough to start hiking rates after mid-year, providing another boost to the dollar bulls.

The market is now waiting for the final reading of US Q4 gross domestic product data due later in the day and also the Reuters/Michigan consumer confidence indicator for March.

Federal Reserve member Stanley Fisher will speak some two hours before the GDP data at 12:30 GMT after which the focus will shift to the speech by Fed Chair Janet Yellen at 19:45 GMT. Yellen's remarks will, however, show its effect only on Monday.