Oil prices found stability on Thursday, rebounding after a sharp decline in the previous session as concerns surrounding shipping disruptions along the Red Sea route alleviated. Despite ongoing tensions in the Middle East, the market showed signs of steadiness.
Brent crude futures saw a modest uptick of 10 cents, equivalent to 0.1%, settling at $79.75 a barrel by 0424 GMT. Meanwhile, U.S. WTI crude futures experienced a marginal dip of 5 cents, reaching $74.06 a barrel. The market had witnessed a nearly 2% drop on Wednesday as significant shipping companies resumed operations in the Red Sea.
Hiroyuki Kikukawa, President of NS Trading, a unit of Nissan Securities (OTC:NSANY), commented on the situation, stating, “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.”
Kikukawa added, “The market is likely to try the upside again, perhaps in the early new year. 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, contribute to this sentiment.”
Danish shipping giant Maersk announced its plans to resume operations in the Red Sea, scheduling several dozen container vessels to travel via the Suez Canal in the coming weeks. This decision follows a temporary halt in those routes earlier this month due to attacks by Yemen’s Iran-backed Houthi militia.
However, the potential for an extended Israeli military campaign in Gaza and the subsequent impact on Red Sea shipping routes continue to influence market sentiment. Israeli forces intensified their attacks on central Gaza by land, sea, and air on Wednesday, with Israel’s chief of staff, Herzi Halevi, indicating that the conflict would persist “for many months.”
Additionally, U.S. government data on fuel stockpiles is expected on Thursday, delayed by a day due to the Christmas holiday on Monday. Data from the American Petroleum Institute released on Wednesday indicated a 1.84 million barrel increase in crude stocks for the week ended December 22, contrasting with estimates from seven analysts polled by Reuters, which anticipated a drop of 2.7 million barrels.