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The
front-month March contract for Brent crude fell 4 cents to
$79.51 a barrel at 1109 GMT. U.S. West Texas Intermediate crude
ticked up 4 cents to $74.41 a barrel.
China's central bank will cut the amount of cash that banks must
hold as reserves from Feb. 5, governor Pan Gongsheng said on
Wednesday, the first such cut for the year as policymakers
extend efforts to shore up a fragile economic recovery.
The move will free up 1 trillion yuan ($139.45 billion) to the
market, he added.
Meanwhile, U.S. crude stocks fell by 6.67 million barrels in the
week ended Jan. 19, according to market sources citing American
Petroleum Institute figures on Tuesday. Gasoline inventories,
however, increased by 7.2 million barrels, stoking concerns over
fuel demand in the world's top oil consumer.
The Energy Information Administration (EIA), the statistical arm
of the U.S. Department of Energy, will release the data later on
Wednesday.
A stronger U.S. dollar also weighed on oil prices as demand from
buyers in other currencies ebbs as they have to pay more for
dollar-denominated oil.
The dollar index hovered near a six-week high against major
peers on Wednesday as investors cemented expectations that the
Federal Reserve would be in no rush to cut interest rates in the
face of a resilient U.S. economy.
Geopolitical tensions, which have led to a massive displacement
in global trade, remained in focus.
"Heightened geopolitical risk, including the recent shipping
disruptions, will maintain the oil price premium," ratings
agency Fitch said on Wednesday.
"However, without material disruptions to actual oil production,
or a wider escalation of attacks ... we do not expect a strong
upside to our $80 a barrel Brent price assumption for 2024, as
there is material OPEC+ spare capacity," it added.
A coalition of 24 nations led by the U.S. and UK conducted new
strikes against Houthi fighters in Yemen on Tuesday. The strikes
were aimed at stopping the Houthis' attacks on global trade,
Britain said in a joint statement.
The U.S. said Iran-backed Houthis have mounted 26 attacks since
late November on commercial shipping in the Red Sea, a shipping
lane used by about 12% of global oil trade before the attacks.
The U.S. also carried out strikes against Iran-linked militia in
Iraq on Tuesday, following an attack on an Iraqi air base that
wounded U.S. forces.
(Additional reporting by Colleen Howe and Muyu XuEditing by
Sharon Singleton)
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