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While hopes of rate cuts and conflict in the Red Sea have led to
a rebound in crude prices, Maersk's announcement of a restart of
shipping routes through the waterway has alleviated supply
concerns to a certain extent, said CMC Market analyst Leon Li.
Brent crude futures slipped 7 cents, or 0.1%, to $79.00 a barrel
by 1030 GMT while U.S. West Texas Intermediate crude fell 28
cents, or 0.4%, to $73.28.
"The lack of oil supply disruptions is offsetting the support to
prices from ongoing geopolitical tensions in the Middle East,"
said UBS analyst Giovanni Staunovo, adding that trade was thin
and in a narrow range typical of holiday periods.
Volume is light because some markets are closed for public
holidays.
Both oil benchmarks registered gains of about 3% last week after
Houthi attacks on ships disrupted global shipping and trade
while the Israel-Hamas conflict shows no sign of easing.
Shipping companies had stopped sending vessels through the Red
Sea and imposed surcharges for re-routing ships. The Red Sea
connects with the Suez Canal, a major shipping route used for
about 12% of global trade.
Maersk's statement on Sunday cited deployment of a US-led
military operation designed to ensure the safety of commerce in
the area.
Germany's Hapag-Lloyd will decide on Wednesday how it will
proceed with its Red Sea routes after suspending shipments
there, a spokesperson said on Tuesday.
Two explosions in the Red Sea were reported by a vessel sailing
off the coast of Yemen on Tuesday shortly after two unmanned
aircraft were sighted, a British maritime authority said.
Oil also found support from expectations that the Fed wil cut
interest rates next year. Lower interest rates cut consumer
borrowing costs, which can boost economic growth and oil demand.
(Reporting by Alex Lawler and Florence TanEditing by David
Goodman)
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