Oil prices show little change as Red Sea unrest continue
Oil prices showed little change as investors’ worries continue about the U.S. economy against supply distribution amid Red Sea unrest.
After making significant moves earlier in the week, oil prices in Asian trade on Wednesday showed little change as investors’ worries continue about the US economy against the possibility of supply disruptions due to ongoing Red Sea tensions.
Brent Crude dropped by 0.01 per cent or 1 cent, to $75.88 a barrel.
US West Texas Intermediate crude futures (WTI) fell by 0.11 per cent or 8 cents, to $70.3 a barrel.
Noticeably, oil prices had already increased by about $2 earlier in the week amid the Houthi rebel attacks on ships in the Red Sea over the weekend and the alleged arrival of an Iranian warship on Monday.
However, before the Federal Reserve meeting minutes and jobs data were released, the market dropped in the previous session as hopes for swift and drastic interest rate cuts in the United States faded.
A more extensive conflict might shut down important waterways used for oil transport and interfere with trade.
“The geopolitical risks are not being priced in at the moment on the assumption that a regional flare-up will continue to be avoided,” Suvro Sarkar, energy sector team lead at DBS Bank told Reuters.
He added that in contrast to the second half of last year, markets were expected to be muted overall in the first quarter but to be choppy in the near term.
Moreover, Prices have been contained ahead of The Organisation of the Petroleum Exporting Countries (OPEC+) plans to convene its Joint Ministerial Monitoring Committee (JMMC) in early February, due to expectations of a plentiful supply of oil in the first half of 2024. There is no set date yet, according to three alliance sources.
The decision to hold the meeting in early February, according to senior market analyst Kevin Wong of OANDA, suggested that OPEC+ was growing uneasy about the state of the weak oil market given that the voluntary cuts of 2.2 million barrels per day for the first quarter, which were agreed upon at the previous meeting on November 30, had not succeeded in stabilising the market.
“Due to a lack of fresh catalysts, WTI oil is likely to trade sideways in the short term between $68.90 and $72.30 a barrel (close to the downward-sloping 20-day moving average),” he continued.
