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The oil market exhibited stability on Thursday, rebounding from a previous sharp decline driven by eased concerns regarding shipping disruptions along the Red Sea route, even as tensions continued to escalate in the Middle East.
Brent crude futures experienced a marginal uptick of 2 cents to reach $79.75 per barrel by 0736 GMT. Meanwhile, U.S. WTI crude futures slightly dipped by 3 cents to stand at $74.08 per barrel. Wednesday saw a nearly 2% drop in prices as major shipping companies resumed operations in the Red Sea.
Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities, highlighted, “Concerns surrounding Red Sea shipping have alleviated. However, ongoing apprehensions regarding tensions in the Middle East, particularly Iran’s involvement in the region, are hindering further sales.”
Kikukawa added, “The market is expected to explore the upside once again, potentially in the early stages of the new year. This anticipation is bolstered by expectations of increased fuel demand due to monetary easing in the United States and heightened kerosene consumption amid the winter season in the northern hemisphere.”
Danish shipping giant Maersk announced the scheduling of several dozen container vessels to traverse the Suez Canal and Red Sea in the upcoming weeks. This move comes after a temporary suspension of these routes due to attacks by Yemen’s Iran-backed Houthi militia.
The market sentiment remains influenced by the possibility of an extended Israeli military campaign in Gaza and the potential for the conflict to impact shipping activities in the Red Sea.
Israeli forces continued to intensify their operations in central Gaza through land, sea, and air assaults on Wednesday. Israel’s chief of staff, Herzi Halevi, indicated a prolonged duration for the conflict, stating that it could persist “for many months.”
Thursday’s scheduled release of U.S. government data on fuel stockpiles, delayed by a day due to the Christmas holiday, adds to market anticipation. Previous data from the American Petroleum Institute revealed a surprising increase of 1.84 million barrels in crude stocks for the week ended December 22, contrary to analysts’ expectations of a 2.7 million barrel decline according to Reuters’ poll of seven analysts.