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Brent crude fell 39 cents to $75.50 a barrel by 1056 GMT, while
U.S. West Texas Intermediate crude futures slipped 51 cents to
$69.87 a barrel.
Prices had climbed around $2 earlier in the week following
attacks on vessels in the Red Sea by Houthi rebels. On Tuesday
they fired two anti-ship ballistic missiles into the Southern
Red Sea, though no damage was reported.
A wider conflict could close crucial waterways for oil
transportation and disrupt trade flows.
"Although the supply of oil has not been affected, as reflected
in yesterday’s oil price sell-off, the nervousness is
conspicuous," said Tamas Varga of oil broker PVM.
Both benchmarks ended Tuesday more than 1% down, with optimism
about early and aggressive U.S. interest rate cuts also ebbing
ahead of the release of Federal Reserve meeting minutes and jobs
data on Wednesday.
"The market bade farewell to 2023 with a considerable
liquidation of length and persisting anxiety about the
geopolitical outlook failed to draw buyers back to the fore as
the new year has kicked off," added Varga.
Israeli forces intensified their bombing of the Gaza Strip on
Wednesday, after the war stretched into Lebanon with the killing
in Beirut of Hamas' deputy leader.
Meanwhile, expectations of ample oil supply in the first half of
2024 have kept a lid on prices ahead of OPEC+ plans to hold a
meeting of its Joint Ministerial Monitoring Committee (JMMC) in
early February.
An exact date has not been decided, three sources from the
alliance told Reuters.
The decision to hold the meeting in early February suggests
OPEC+ is possibly growing uneasy over currently weak oil market
conditions, despite voluntary cuts of 2.2 million barrels a day
for the first quarter agreed in November, OANDA's senior market
analyst Kevin Wong said.
"WTI oil is likely to trade sideways in the short term between
$68.90 and $72.30 a barrel (close to the downward-sloping 20-day
moving average)," he added.
Ahead of weekly U.S. crude and product inventory reports,
analysts polled by Reuters expected crude stockpiles fell last
week, while distillate and gasoline stocks likely rose.
(Reporting by Natalie Grover, Trixie Yap and Laura Sanicola;
editing by Jamie Freed and Jason Neely)
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