Oil prices slide as Red Sea transport disruptions ease
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[December 28, 2023] By
Natalie Grover
LONDON (Reuters) -Oil prices fell around 1% on Thursday as concerns
eased about shipping disruptions along the Red Sea route, even as
tensions in the Middle East continue to fester.
Front month February Brent crude futures were down 90 cents, about 1.1%,
at $78.75 a barrel by 1141 GMT in subdued trade ahead of their imminent
expiry, while the more active March contract was down 69 cents, about
0.9%, at $78.85 a barrel.
U.S. WTI crude futures were trading 80 cents, or about 1.1%, lower at
$73.31 a barrel. Oil prices dropped nearly 2% on Wednesday as major
shipping firms began returning to the Red Sea.
Denmark's Maersk will route almost all container vessels sailing between
Asia and Europe through the Suez Canal from now on while diverting only
a handful around Africa, a Reuters breakdown of the group's schedule
showed on Thursday.
Major shipping companies, including container giants Maersk and Hapag-Lloyd,
stopped using Red Sea routes and the Suez Canal earlier this month after
Yemen's Houthi militant group began targeting vessels, disrupting global
trade.
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However, a U.S.-led coalition to quell tensions in the Red Sea has not
so far yielded coordinated action as hoped.
A week after the launch of the maritime force, many allies do not want
to be associated with it, partly reflecting the fissures created by the
conflict in Gaza, which has seen the U.S. maintain firm support for
Israel even as international criticism rises over its offensive.
Israel has escalated its ground war in Gaza sharply since just before
Christmas, with Israel's chief of staff Herzi Halevi telling reporters
this week that the war would go on "for many months".
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Pumpjacks are seen against the setting sun at the Daqing oil field
in Heilongjiang province, China December 7, 2018. Picture taken
December 7, 2018. REUTERS/Stringer/file photo
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U.S. government data on fuel stockpiles is due on Thursday, delayed
by a day due to the Christmas holiday on Monday.
Data from the American Petroleum Institute industry group on
Wednesday showed crude stocks rose 1.84 million barrels in the week
ended Dec. 22, against estimates from seven analysts polled by
Reuters for a drop of 2.7 million barrels.
Meanwhile, the growing prospect of interest rate cuts in Europe and
the U.S. in 2024 are positive from an oil demand perspective.
"The market is likely to try the upside again ... maybe in the early
new year, also on expectations of a recovery in fuel demand thanks
to monetary easing in the United States and higher kerosene demand
during the winter in the northern hemisphere," said Hiroyuki
Kikukawa, president of NS Trading, a unit of Nissan Securities.
(Reporting by Natalie Grover, Yuka Obayashi and Sudarshan Varadhan;
Editing by Tomasz Janowski, Kirsten Donovan)
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