Oil edges lower after hitting 1-month high on Red Sea attack; Brent at $80
Oil prices slipped on Wednesday, December 27, paring the previous day’s gains as investors monitored developments in the Red Sea, where shippers are returning despite further attacks on Tuesday.
Brent crude futures were down 53 cents, or 0.7 per cent, at $80.54 a barrel. US West Texas Intermediate crude fell 67 cents, or 0.9 per cent, to $74.90, according to news agency Reuters. Both the Brent and WTI benchmarks settled more than 2 per cent higher in the previous session as the latest attacks on ships in the Red Sea prompted fears of shipping disruption.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a January 19 expiry, was last trading 1.63 per cent lower at ₹6,212 per bbl, having swung between ₹6,193 and ₹6,314 per bbl during the session, against a previous close of ₹6,315 per barrel.
What’s weighing on crude oil prices?
-Danish shipping company Maersk said it has scheduled several dozen container vessels to travel via the Suez Canal and Red Sea in the coming weeks after calling a temporary halt to those routes this month after attacks by Yemen’s Iran-backed Houthi militia.
-The prospect of a prolonged Israeli military campaign in Gaza remained a major driver of market sentiment. Israeli forces pummelled central Gaza by land, sea and air on Wednesday, a day after Israel’s Chief of Staff Herzi Halevi told reporters the war would go on “for many months”.
-Elsewhere, oil loadings at the Russian Black Sea port of Novorossiisk were suspended because of a storm. However, the Caspian Pipeline Consortium (CPC) terminal near the port was open, said Kazakhstan’s energy ministry.
-US crude stocks were expected to have fallen by 2.6 million barrels last week, while distillate and gasoline inventories were expected to have risen, according to a preliminary poll conducted by Reuters.
-Oil output in Russia, the third largest producer in the world after the US and Saudi Arabia, is expected to be steady or even to increase next year as Moscow has largely overcome Western sanctions, according to analysts.
-Oil prices also eased last week over expectations Angola could increase oil output after leaving the Organisation of Petroleum Exporting Countries (OPEC) cartel. Crude is headed for its first annual drop since 2020 as surging production from the US and elsewhere counters efforts by the OPEC cartel to support prices through output cuts
Where are prices headed?
Crude oil concluded on a positive note yesterday amid escalating tensions in the Red Sea following a drone attack on an oil tanker. The surge in crude oil prices was further fuelled by a weakening dollar index, which hit a five-month low due to growing optimism about imminent interest rate cuts from the US Federal Reserve. US actively contributed to the bullish trend by initiating purchases for its strategic reserves, lending additional support to prices.
‘’Anticipating ongoing volatility, we project that crude oil prices will exhibit fluctuations. The support level for crude oil stands at $74.50–73.80, with resistance expected at $75.90-76.50 in today’s session. In terms of the Indian Rupee (INR), crude oil finds support at ₹6,210-6,140, while resistance is identified at ₹6,380-6,440,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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Published: 27 Dec 2023, 10:45 PM IST
