Oil prices steadied on Thursday, recovering from the previous session’s sharp decline, as worries about shipping disruptions along the Red Sea route eased. Brent crude futures inched up 10 cents, or 0.1%, reaching $79.75 a barrel by 0424 GMT, while U.S. WTI crude futures were trading 5 cents lower at $74.06 a barrel.
The decline in prices by nearly 2% on Wednesday was prompted by major shipping firms resuming operations in the Red Sea. Despite this alleviation of concerns, tensions in the Middle East continued to escalate, contributing to the delicate balance in the oil market.
Hiroyuki Kikukawa, President of NS Trading, a unit of Nissan Securities, 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 suggested that the market might attempt an upside move, potentially in the early new year. Expectations of a recovery in fuel demand, thanks to monetary easing in the United States, and an anticipated increase in kerosene demand during the winter in the northern hemisphere could contribute to this upward trend.
However, uncertainties loom over the market, with the prospect of a prolonged Israeli military campaign in Gaza and the potential spillover of the conflict to attacks on ships in the Red Sea remaining significant factors influencing market sentiment. As the situation evolves, market participants will closely monitor geopolitical developments that could impact global oil supplies and prices.
