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Brent crude futures were down 53 cents, or 0.65%, at $80.54 a
barrel by 1141 GMT. U.S. West Texas Intermediate crude lost 62
cents, or 0.82%, to $74.95.
Prices could be down on the day on Wednesday because of investor
profit-taking after a strong rally on Tuesday, said UBS analyst
Giovanni Staunovo.
Both benchmarks settled more than 2% higher in the previous
session as fresh attacks on ships in the Red Sea prompted fears
of shipping disruption, with further price support from hopes of
U.S. interest rate cuts that could boost economic growth and
fuel demand.
Despite the attacks by Yemen's Iran-backed Houthi militia, large
shipping companies such as Maersk and France's CMA CGM were
resuming passage through the Red Sea after the deployment of a
multinational task force to the region.
The prospect of a prolonged Israeli military campaign in Gaza
also remains a major driver of market sentiment.
Israeli forces pummelled central Gaza by land, sea and air on
Wednesday after Israel's Chief of Staff Herzi Halevi told
reporters on Tuesday that the Gaza war would go on "for many
months".
Elsewhere, oil loadings at the Russian Black Sea port of
Novorossiisk were suspended because of a storm on Wednesday,
sources told Reuters.
But crude exports from the Caspian Pipeline Consortium (CPC)
terminal near the port have already resumed, Kazakhstan's energy
ministry said.
U.S. crude stocks were expected to have fallen by 2.6 million
barrels last week while distillate and gasoline inventories were
likely expected to have risen, a preliminary Reuters poll showed
on Tuesday.
Inventory reports from the American Petroleum Institute and the
Energy Information Administration are expected on Wednesday and
Thursday respectively, a day later than normal for both reports
because of the Christmas holiday.
(Reporting by Robert Harvey in London and Jeslyn Lerh in
SingaporeAdditional reporting by Andrew Hayley in BeijingEditing
by David Goodman)
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