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A
cruise missile launched from Houthi-controlled Yemen struck a
commercial chemical tanker, causing a fire and damage but no
casualties in the latest such attack to heighten safety risks
for tankers in vital shipping lanes.
Brent crude futures for February fell 32 cents, or 0.4%, to
$75.71 per barrel by 1105 GMT, while U.S. West Texas
Intermediate crude futures for January delivery slipped 19
cents, or 0.3%, to $71.13.
Although the attack on the vessel helped oil to rally earlier,
"sentiment remains negative", said Tamas Varga of broker PVM.
"There is no help coming from the demand side of the oil
equation. The fundamental backdrop is discouraging."
Global oil demand growth is set to slow in 2024 with OPEC and
the International Energy Agency split on the extent, and a
recent OPEC+ deal to limit supply underwhelmed the market. OPEC
and the IEA both update their forecasts this week.
Investors were also cautious ahead of a crucial U.S. inflation
report and interest rate decision. The Consumer Price Index
(CPI) report is due out on Tuesday, while the Federal Open
Markets Committee's two-day policy meeting ends on Wednesday.
"All attention will be on the U.S. CPI data today to potentially
set the tone for U.S. policymakers at their upcoming meeting,"
Yeap Jun Rong, market analyst at IG, said in a note.
Also in focus are talks at the COP28 climate summit, where
negotiators are awaiting a new draft deal after many countries
criticised a previous version as too weak because it omitted a
"phase-out" of fossil fuels.
And coming into view are the latest U.S. inventory reports,
which are expected to show a 1.5 million-barrel drop in crude
stocks. The first report is at 2130 GMT from the American
Petroleum Institute.
(Additional reporting by Emily Chow and Muyu Xu; editing by Kim
Coghill and Jason Neely)
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