ALBAWABA – Oil prices fell on Thursday from Wednesday highs, bolstered then by concerns of escalation in the Middle East over the disruption of Red Sea shipping, due to attacks by the Houthi rebel group against Israeli-affiliated ships, with the US dollar little changed.
Global benchmark Brent dropped from over $80 per barrel to $79.67 by 0753 GMT, according to Reuters, while West Texas Intermediate (WTI) crude traded at $74.16 a barrel, also down $0.06.
Both benchmarks ended higher on Wednesday for a third straight session, as investors worried about trade disruptions as major maritime carriers chose to steer clear of the Red Sea route.
Notably, longer voyages increase transport and insurance costs.
The United States (US) Energy Information Administration (EIA) said on Wednesday that U.S. crude inventories rose by 2.9 million barrels in the week to December 15 to 443.7 million barrels.
According to Reuters, analysts in a Reuters poll expected a 2.3 million barrel drop.
The US Dollar was slightly weaker, as Bloomberg’s dollar index spot was 0.01 percent lower by 1243 Amman Time, at 102.3930.
Oil prices down against slightly weaker US dollar - Shutterstock
The Euro edged higher against the US dollar 0.01 percent, while the Pound Sterling retreated, down 0.09 percent, at $1.29, according to Bloomberg.
The US dollar was also down against the Japanese Yen, by 0.29 percent, at 143.15.
Bitcoin and Ethereum were both in the green, rising 0.40 percent and 1.36 percent, respectively, while US 10-year Treasuries stood at 105.17, according to Bloomberg.
Overall, Reuters reported the dollar had weakened against all Group-of-10 peers after US 10-year yields dropped to a five-month low on Wednesday, as markets look out for lower US interest rates.
Risk assets are taking a breather after this month’s rally, which saw stocks worldwide climb to their highest level in 2023. Overbought conditions in the US have also contributed to the selling as gauges of relative strength rose to levels that in the past have accurately predicted declines.
However, Russia’s announcement it will be cutting market supply due to maintenance and weather have boosted oil prices over the past few days.
Yet, speculations on the impact of oil cuts by the Organization of Petroleum Exporting Countries and its allies (OPEC+), announced earlier this month, have also helped offset concerns. More so as traders expect the market to be oversupplied as US output hits a record high and is expected to exceed oil demand in 2024.
