Oil prices were little changed on Wednesday as investors monitored developments in the Red Sea. Some major shippers continued to transit the region despite ongoing attacks and tensions in the Middle East.
Brent crude futures were down 5 cents, or 0.1%, at $81.02 a barrel as of 04:15 GMT. West Texas Intermediate (WTI) crude was down 12 cents, or 0.2%, at $75.45 a barrel.
The benchmarks rose more than 2 percent in the previous session as new attacks on ships in the Red Sea raised fears of shipping disruptions, along with U.S. interest rate cuts that could boost economic growth and boost demand.
Despite attacks by Yemen’s Iran-backed Houthi militia, major shipping companies such as Maersk and CMA CGM continue to transit the Red Sea, showing their confidence in the multinational task force deployed to the region. Hapag-Lloyd is expected to decide on Wednesday whether to continue shipments via the Red Sea.
Despite problems in shipping channels and rerouting of ships, it is still debatable how much global supplies have been affected.
The possibility of prolonged Israeli military action against Gaza remains an important element of market sentiment. Israeli Chief of Staff Herzi Halevi told reporters on Tuesday that the Gaza war would last “for months.”
While markets continue to be supported by speculation that the US Federal Reserve will start reducing interest rates in 2024, declines in oil prices remained limited on Wednesday. Low-interest rates reduce borrowing costs and spur economic growth and demand for more oil.
U.S. crude oil inventories were expected to fall by 2.6 million barrels last week, according to a preliminary survey, while distillate and gasoline inventories are also expected to rise.
Stockpile reports from the industry group American Petroleum Institute (API) and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, are expected to be released on Wednesday and Thursday, respectively, a day later than usual due to the Christmas holiday.
