Oil prices stabilized today, Thursday, after a sharp decline in the previous session. Concerns about shipping disruptions along the Red Sea route eased even as tensions in the Middle East continued to escalate.
By 0424 GMT, Brent crude futures rose ten cents, or 0.1 percent, to $79.75 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude futures were trading five cents lower at $74.06 per barrel. Prices fell by about 2 percent on Wednesday as major shipping companies began returning to the Red Sea.
Oil demand recovery
Hiroyuki Kikukawa, president of NS Trading, told Reuters that “Concerns about shipping in the Red Sea have eased, but continued worries about tensions in the Middle East, especially on Iran’s involvement in the region, make it difficult to sell further.”
He believed that “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.”
Ship traffic returns
Meanwhile. Danish shipping company Maersk said that it has set dates for dozens of container ships to travel through the Suez Canal and the Red Sea in the coming weeks, following a temporary halt to those routes. However, any possibility of security incidents remains a major driver of market sentiment.
The U.S. government is scheduled to release fuel inventory data on Thursday, one day late, due to the Christmas holiday.
Read: United States buys 3 million oil barrels as strategic reserve
U.S. crude inventories rise
Data from the American Petroleum Institute (API) revealed yesterday, Wednesday, that crude inventories rose by 1.84 million barrels in the week ending on December 22. That is compared to estimates of a decline of 2.7 million barrels by seven analysts polled by Reuters.
Notably, oil prices did not witness any significant change during Asian trading last Tuesday, with investors focusing on geopolitical tensions in the Middle East. Moreover, they are optimistic about the possibility that the Federal Reserve will soon begin lowering interest rates.
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